Survey: IT services business may be brightening

Information technology services firms envision an improved short-term business future, according to the results of a monthly survey released Nov. 4. Survey respondents said the federal government and transportation sectors are the biggest sources of recent business demand.

The survey was released by the Information Technology Association of America of Arlington, Va., a trade association; Input Inc. of Chantilly, Va., an IT market research firm; and Legg Mason Wood Walker Inc. of Baltimore, a financial services firm.

The poll of 57 IT services company executives found their month to month revenue expectations for October were up significantly, with smaller gains made in billable head count, billing rates, wage rates and operating margins.

"This is good news for a sector that has mostly seen its fortunes stalled in recent times," said ITAA President Harris Miller. "We are also starting to see the targets of opportunity increase somewhat, from strictly federal contracting to renewed optimism for future business demand in the telecom, education and banking sectors."

The survey also asked what IT services firms view as their most intense sources of competition. Large systems integrators, large consulting firms and hardware vendors led the pack. Offshore IT services firms were considered a competitive threat by far fewer survey respondents, as were software firms.

"We are not surprised that customers move to larger firms during difficult economic times. We are somewhat surprised that software companies, often with 50 percent or more of their revenue generated by support services, are not perceived as a more substantial competitive threat to IT services companies," Miller said.

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