Gartner: VARs Will Return To Growth In 2010

Acknowledging that IT services providers faced unique challenges last year, Kathryn Hale, research vice president for Gartner's worldwide IT services group, noted that integrators adapted to survive the recession. Business focus changed from, for example, aggressive sales or tactical revenue acquisition to less risky strategies that would maintain revenue levels and control costs.

"We’re expecting a return to growth in 2010 ... our current forecast for IT Services is for 5.7 percent growth in IT Services worldwide in 2010," Hale told CRN. "We did see some growth in outsourcing at the close of 2009, which we believe will spread to consulting and system integration in 2010. That said, we also expect to see a long-term recession 'hangover' as a more-cautious mind-set continues as the norm among a lot of buyers who keep looking for small, safe deals where cost take-out is a key factor."

Gartner's report noted that the top five IT solution providers (based on market share) declined in revenue, with top-ranked IBM declining almost seven percent. However, it found that providers of consulting services with established business relationships were often more successful in growing their market share.

Customers favored suppliers with a wide range of advisory services. For example, VARs that could provide assistance on how to migrate financial risks of an underperforming complex business operation were considered attractive business partners. In addition, the report said, some solution providers were able to capitalize from economies already rebounding by selectively co-investing with buyers in growth-focused projects as a way of increasing consulting services market share.

CRN will release the VAR500 on May 24; the VAR500 is a ranking based on revenue of the largest solution providers with a North American headquarters. Last year's list, including profiles, features and the list, can be found at https://www.crn.com/var/main/2009vb500.jhtml.