The copyright-protected information contained in the ANNEX BULLETINS is a component of the Comprehensive Market Service (CMS). It is intended for the exclusive use by those who have contracted for the entire CMS service.
Analysis of 1997 Results of Top Five Global IT Services CompaniesIBM Widens Its Lead Andersen and CSC in Virtual Tie for No. 3; Cap Gemini's Grows Faster
IBM widened its revenue lead in 1997 over the No. 2 global IT services company, EDS, from a $1.5 billion to a $4.1 billion edge. IBM revenues went from $15.9 billion to $19.3 billion, while EDS' increased from $14.4 billion to $15.2 billion.
But the Big Blue will have a hard time maintaining such a revenue momentum in the future, considering that EDS had gained share over IBM in terms of new contract sales. In 1997, EDS nearly doubled its new contract signings - from $8.4 billion to $16.3 billion. IBM's new IT services sales slumped, on the other hand, from $27 billion in 1996 to $24 billion last year (see Annex Bulletin 98-13, 3/28/98). That's an $11 billion swing in EDS' favor.
Andersen Consulting and CSC, on the other hand, continued their neck-and-neck race in 1997 for the No. 3 position among the top IT services vendors. They finished the year in a virtual tie, with revenues of $6.6 billion each. Finally, the No. 5 global IT services firm, Cap Gemini Group (CGG), accelerated its growth in French Francs in 1997 from 31% to 36% (from FF 14.8 billion to FF 20.2 billion). But the strength of the U.S. dollar in the last 12 months reduced CGG's 1997 growth rate to 17% in U.S. dollars.
CGG's preliminary results also show a significant improvement in the company's profitability. Operating margins went from 7% in 1996 to 8% last year, while its net profit, adjusted for capital gains from the sale of its investment in debis Systemhaus (see Annex Bulletin 97-24, 6/05/97), was FF 562 million ($92 million), double the corresponding 1996 total.
Geographic Market Analysis
U.S. But while IBM has taken over the global leadership in IT services in 1995, it is still only the No. 2 vendor in the U.S. market, lagging behind EDS, the U.S. market leader, by more than $2 billion in revenues ($8.0 billion versus $10.1 billion).
CSC is the No. 3 in the U.S. with revenues of $4.4 billion, followed by Andersen which did about $3.4 billion-worth of business in the U.S. in 1997 (see Annex Bulletins 98-08, 2/19/98 and 98-13, 3/25/98).
Europe. The Big Blue is still the biggest IT services competitor in Europe with estimated 1997 revenues of $6.9 billion, nearly double that of the No. 2 EDS ($3.7 billion).
CGG is the No. 3 vendor on the Old Continent with estimated revenues of $2.7 billion. Andersen and CSC and fourth and fifth respectively with $2.3 billion and $1.8 billion European revenues.
Asia/Pacific. IBM is also tops in the Asia/Pacific market, with estimated IT services revenues of $2.9 billion. EDS is No.2 with revenues of just under $1 billion, while CSC, the No. 3, derives a little of $400 million from this market.
Happy bargain hunting!
Editor: Bob Djurdjevic
5110 North 40th Street, Phoenix, Arizona
| Annex Research | Quotes | Workshop | Feedback | Search | Columns | Clips | Activism |