The polish IT services market performed modestly in 2003

PAC has published the forth edition of the SITSI (Software and IT Services Industry) Poland, which is part of its global SITSI survey.

The Polish IT services market had a modest year in 2003, growing by only 4.8%, as the sluggish economic conditions in 2000-2002 had an impact on the demand for IT projects. In addition, the equipping process of the previous years calmed down many usersí enthusiasm for further IT investments, as they were running short of IT money. Another important factor ñ besides the reduction in private demand ñ was the lower-than-expected spending in the public sector: Many big projects encountered difficulties due to the bureaucratic handling of bid processes, which caused considerable delays.

The project services segment was hit hardest by the decrease in demand, rising by only 1.1%, particularly in the manufacturing, finance and telecom sectors. As a result, price pressure emerged in the project services area, putting a strain on the suppliers. Consequently, the market began to consolidate, which is illustrated by an increase of M&A (mergers and acquisitions) initiatives at the lower up to the medium level of the market.

The Polish IT services market has been highly project services oriented so far, due to the usersí reluctance towards outsourcing. According to PAC, the project services segment accounted for roughly 60% of the total IT services expenditure. The Polish hardware maintenance market represented almost 30% while the outsourcing segment had an approximately 10% share in them, showing that this segment is still in its infancy.

From a per capita perspective, the IT services market in Poland lags far behind those of neighbouring countries, with only 31 IT services/ capita, compared to 70 in the Czech Republic, or 56 in Hungary. However, the volume of the market resulted in the emergence of the biggest and most competitive local integrators in the Central and Eastern European region. They are able to compete, along with the global suppliers present in Poland. The Polish services market is clearly dominated by domestic providers: They represent more than half of the companies within the top 20 IT services providers in Poland. Seven out of the first ten IT services suppliers are Polish, three of them rank among the top 5. Prokom and ComputerLand maintain the 1st and the 4th position respectively within the IT services ranking although they recorded slight declines in their IT services revenues in 2003.

PAC expects the IT services market to regain momentum as the economy improves. Moreover, users will continue to invest into technology. The need to catch up with the neighbouring countries as well as the accession to the EU will create a growing demand for professional IT solutions. Consequently, they will more and more invest into IT services. In addition, the start of new and imperative big projects in the public sector will push the market to develop faster.