With approximately 7 percent growth in revenues in 2005, the Israeli information technology services market slightly outgrew the global industry, as companies focused on application integration and project-based services rather than outsourcing, according to research company Gartner Group.
"The general standing for Israeli IT in 2005 was between $3.6 billion and $3.7b., excluding the telecommunications industry, which had revenues of about $4.5b.," Baruch Gindin, managing director of Gartner Mediterranean operations told The Jerusalem Post. "There was a nice growth in IT of around 7% over 2004, but telecom remained relatively flat last year."
A recent Gartner survey showed that worldwide IT services revenue totaled $624.4b. in 2005, up 6% from $588.9b. in the previous year.
Kathryn Hale, VP research at Gartner's worldwide IT services group noted that while the outsourcing service segment had traditionally been the key growth area for the IT services market, that trend was altered in 2005.
"In 2005, project-based services and software support grew at a greater rate than the overall market average, which has not been the case since 2000," she said.
Gindin, meanwhile, added that even with the global slowdown in outsourcing services, the Israeli outsourcing market was lagging behind Europe and the US.
"I believe we are two to three years behind the others," he said, reasoning that local companies prefer to do things themselves and generally feel they have the skill within the organization themselves for the job.
Still, he estimated that approximately $1b. of the $3.6b. in revenues came from outsourcing last year.
Leading the surge in system and application integration in Israel were Matrix, Ness Technologies, and Taldor Communication, Gindin said.
In the international survey, IBM again proved to be the largest revenue earner despite it having grown at a slower rate than the industry average. EDS, Fujitsu and Hewlett-Packard followed IBM on the list and also had slower growth than the average. Only Accenture, in fifth place, and CSC, in sixth, outgrew the market average among the top six, Gartner noted.
In the Europe Middle East and Africa (EMEA) region IT services revenue totaled â‚¬173b. in 2005, a 5.8% increase from 2004.