Europe IT Services Market - Growth, Trends, COVID-19 Impact, and Forecasts (2023 - 2028)

The Europe IT Services Market revenue is expected to grow at a CAGR of 7.1% over the next five years. Increased IT spending, advanced technology such as artificial intelligence, and increased cloud-based offerings have boosted the demand for the IT services market.

Key Highlights

• The IT services market is gaining traction with advanced technology, such as cloud computing. Artificial intelligence is also extending its application across the end-user segment, fueling the market growth over the next five years. For Instance, Accenture has acquired Infinity Works. The acquisition will strengthen and expand the cloud delivery and engineering capabilities of Accenture Cloud in the United Kingdom.
• There is an increasing demand for IT services across BFSI. The growing use of smart technology and rising security expenditures primarily drive the demand for IT services. For Instance, TCS partnered with the NORD/LB bank to simplify and transform its application estate across businesses-financial markets, wholesale and retail banking, through application consolidation and automation.
• The increasing infrastructure developments, such as smart city and data center construction, would drive the growth of the IT services market over the next five years. For Instance, Google announced its plans to expand its operations in Germany with USD 1.18 billion worth of investments in new data centers in the country, with data centers in Frankfurt and the new cloud region in Berlin. The new Hanau Frankfurt facility is expected to be operational soon.
• EU (European Union) has made significant investments in AI in recent years, further supporting future AI in the healthcare sector. Public hospitals in Germany can apply for government funding for projects to boost digital health, cybersecurity, and IT infrastructure. For Instance, under the Hospital Future Act (KHZG), public hospitals will receive a share of USD 4.62 billion for digital health innovation. Such Initiatives in the healthcare sector would drive more demand for the IT services market across the healthcare sector.
• Due to the COVID-19 pandemic, the demand for the adoption of IT services has seen a rise, augmented by technology demand growth due to shutdowns. Companies upgrading IT infrastructures to support remote working amid shutdowns may shift workloads to the public and private cloud. ​ Over the coming years, this is expected to drive the demand further as enterprises move towards cloud and remote working models, creating new growth opportunities for the IT services market.

Europe IT Services Market Trends

Growing Demand for Cloud Services

• Key players in the IT services market are focusing on expanding their businesses and strengthening their cloud services through collaborations and partnerships. For instance, Accenture acquired Edenhouse. Accenture will further enhance its cloud capabilities to support clients in their digital transformation journey through this acquisition.
• The extensive use of digital payments and the introduction of advanced technologies such as AI, cloud computing, and blockchain technology used in the end-user industries are likely to drive the growth of the IT services market over the next five years. For Instance, Tata Consultancy Services (TCS) has expanded its partnership with Zurich Insurance Germany to modernize, transform, and manage the entire application estate supporting its life insurance business.
• The adoption of remote healthcare and wearable devices in this sector has been gaining traction over recent times, which, in turn, has been one of the significant factors influencing the healthcare IT market. The major trends in wearable connected devices include increasing demand for pain management wearable devices, increasing use of wearables for cardiovascular disease management, and others. For Instance, GE Healthcare launched its wireless patient monitoring system, Portrait Mobile, to help clinicians detect early patient deterioration and constantly monitor patients' health during their stay at the hospital.
• The increasing adoption of cloud services and the growing data center construction projects are boosting the IT service market demand. For instance, in June last year, Vantage Data Centers planned to open its new data centers in Berlin and Warsaw under its USD 2 billion European expansion policy. The company's Berlin I campus features a 32MW capacity across 250,000 square feet and a data center campus in Warsaw to offer a 48MW capacity across 390,000 square feet to support cloud providers and hyperscalers.
• According to an ARD/ZDF online study, the number of internet users last year was 67 million. The number of internet users is rising and significantly increasing the demand for the IT services market.

United Kingdom is Expected to Register Significant Market Growth During the Forecast Period

• The United Kingdom IT services market is expanding significantly. The growing use of smart technology and rising security expenditures in the healthcare sector primarily drive the demand for IT services. For Instance, Abtrace using machine learning and clinical innovation in the delivery of primary care, launched a proactive monitoring system designed to empower patients with chronic conditions.
• According to the Organization for Economic Corporation and Development, United Kingdom healthcare expenditure has grown at a CAGR of 0.4% from 2020 to the previous year. In the healthcare sector, increasing technological developments, such as the Internet of Things (IoT) and wearables, cloud services, product engineering services, integration services, and data science and business intelligence solutions, are expected to boost the market growth.
• Key players in the United Kingdom IT services market are focused on expanding their IT infrastructure that supports advanced technologies such as cloud computing. For Instance, NTT plans to launch its seventh London data center site in Hemel Hempstead.
• Another factor is the influence of the COVID-19 pandemic, which has pushed the BFSI sector to start moving towards digitizing products and reducing human contact. For Instance, Tata Consultancy Services has extended its collaboration with the British financial institution, Nationwide Building Society to offer enterprise agility and operational resilience to the financial institution.

Europe IT Services Market Competitor Analysis

The Europe IT services market is Highly competitive. Key players in the IT services market, such as Accenture Plc, Capgemini SE, Hewlett Packard Enterprise, IBM, and Tata Consultancy Services Limited, dominate the market in terms of market share. Moreover, the variables are involved in various mergers and acquisitions and product innovation, among others, to gain a competitive edge over others.

In February 2022, IBM collaborated with SAP to deliver technology and consulting experience to help clients embrace a hybrid cloud strategy and migrate mission-critical workloads from SAP systems to the cloud in regulated and non-regulated industries.

In April 2022, Accenture completed the acquisition of Avieco. This acquisition of Accenture's ESG measurement and analytics capabilities as converging standards and increased regulation drive client need for accurate data in decision-making.

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