IT Consulting in The US - IBIS

WWW.IBISWORLD.
COM IT Consulting in the USAugust 2017 1
All systems go: Rising corporate profit will lead

to increased use of industry services
This report was provided to
University of Nevada, Reno (2126926196)
by IBISWorld on 01 September 2017 in accordance with their license agreement with IBISWorld
IBISWorld Industry Report 54151

IT Consulting in the US
August 2017 Dylan Miller
2 About this Industry 18 International Trade 34 Key Statistics

2 Industry Definition 19 Business Locations 34 Industry Data
2 Main Activities 34 Annual Change
2 Similar Industries 21 Competitive Landscape 34 Key Ratios
3 Additional Resources 21 Market Share Concentration 35 Industry Financial Ratios
21 Key Success Factors
4 Industry at a Glance 22 Cost Structure Benchmarks 36 Jargon & Glossary
24 Basis of Competition
5 Industry Performance 25 Barriers to Entry
5 Executive Summary 25 Industry Globalization
5 Key External Drivers
7 Current Performance 27 Major Companies
9 Industry Outlook
11 Industry Life Cycle 30 Operating Conditions
30 Capital Intensity
13 Products & Markets 31 Technology & Systems
13 Supply Chain 32 Revenue Volatility
13 Products & Services 32 Regulation & Policy
15 Demand Determinants 33 Industry Assistance
16 Major Markets
www.ibisworld.com | 1-800-330-3772 | info @ibisworld.com

WWW.IBISWORLD.COM IT Consulting in the USAugust 2017 2
About this Industry
Industry Definition The IT Consulting industry includes communication infrastructure; and

firms that provide the following on-site management of computer
services to client companies: writing, systems and data processing facilities.
testing and supporting custom This industry excludes packaged
software; planning and designing software publishers and off-site data
integrated hardware, software and processing and hosting services.
Main Activities The primary activities of this industry are

Providing information technology expertise for consumers
Writing, modifying, testing and supporting software to meet the specific needs of one client
Planning, design and integration of computer or network systems
On-site management and operation of IT functions
The major products and services in this industry are

Computer systems development
Custom services
IT infrastructure
Technical support
Technical consulting
Other services
Similar Industries 42343 Computer & Packaged Software Wholesaling in the US

This industry wholesales IT goods that consultants use or operate on.
44312 Computer Stores in the US

This industry sells computer hardware or software products and provides support services, such as
customized assemblies.
51121 Software Publishing in the US

This industry produces and distributes computer software, including designing, providing documentation,
assisting in installation and providing support services to software purchasers.
51821 Data Processing & Hosting Services in the US

This industry is often a small part of the broader consulting process, and there is a great deal of outsourcing
to this industry.
Provided to: University of Nevada, Reno (2126926196) | 01 September 2017

About this Industry
Additional Resources For additional information on this industry

www.aitp.org
Association of Information Technology Professionals
www.itic.org
Information Technology Industry Council (ITI)
www.itconsulting.com
IT Consulting
www.siia.net
Software & Information Industry Association
www.opengroup.org
The Open Group
IBISWorld writes over 1000 US

industry reports, which are updated
up to four times a year. To see all
reports, go towww.ibisworld.com

WWW.IBISWORLD.COM IT Consulting in the US August 2017 4
Industry at a Glance
IT Consulting in 2017
Key Statistics Revenue Annual Growth 12-17 Annual Growth 17-22

Snapshot
$408.2bn 2.1% 2.9%
Profit Wages Businesses
$29.8bn $191.3bn 317,837

Revenue vs. employment growth Private investment in computers and
Market Share software
There are no major 8 9
players in this 6 6
industry
4
3
% change
% change
2
0
0
-2 -3
-4 -6
Year 09 11 13 15 17 19 21 23 Year 10 12 14 16 18 20 22
Revenue Employment
SOURCE: WWW.IBISWORLD.COM
p. 27
Products and services segmentation (2017)
Key External Drivers 10.0%

Private investment in Technical consulting
computers and software 25.1%
Custom services
Corporate profit 10.7%
Technical support
Government consumption
and investment
Number of mobile
internet connections 12.4%
Computer systems
Consumer price index development
22.8%
19.0% Other services
p. 5 IT infrastructure
SOURCE:
WWW.IBISWORLD.COM
Industry Structure Life Cycle Stage Growth Regulation Level Light

Revenue Volatility Medium Technology Change High
Capital Intensity Low Barriers to Entry Low
Industry Assistance Low Industry Globalization High
Concentration Level Low Competition Level High
FOR ADDITIONAL STATISTICS AND TIME SERIES SEE THE APPENDIX ON PAGE 34

Industry Performance
Executive Summary | Key External Drivers | Current Performance
Industry Outlook | Life Cycle Stage
Executive The IT Consulting industry is composed five-year period and constantly rising
Summary of companies that help businesses design investment in computers and software has
and implement information technology helped drive industry revenue growth.
(IT) systems and infrastructure. Due to Overall, industry revenue is projected to
the low capital requirements of the grow an annualized 2.1% to $408.2 billion
industry, a modest number of operators over the five years to 2017, including a
are small nonemployers or independent projected increase of 4.1% in 2017.
contractors. Over the five years to 2017, Financial service companies, such as
shifting technological trends toward banks, insurance and credit card
cloud computing and data analytics have companies, are some of the largest
caused larger operators to acquire customers of industry services, generating
smaller companies and develop new 19.6% of industry revenue. With rising
products to stay relevant. For example, revenue and low barriers to entry,
industry competition is also expected to
rise as new players enter the market to
Shifting
technology trends boosted demand provide new technologies to customers.
for new services and encouraged companies to As the economy strengthens, corporate
profit will continue to rise and support
replace older, more traditional technology investment in computers and software.
Growth in demand from finance and
Accenture PLC purchased more than 15 insurance, which are two of the largest
companies in 2017, as of August. markets for industry operators, is
Likewise, International Business anticipated to accelerate and further
Machines Corp. (IBM) spent $1.0 billion benefit the IT Consulting industry.
on Watson, a computing system that IBM Additionally, the continued shift to cloud
built to apply advanced natural language computing and the use of data analytics
processing, information retrieval and will intensify security concerns.
machine learning, among other skills. Consequently, IBISWorld expects
Shifting technology trends boosted industry revenue to rise at an annualized
demand for new services and encouraged rate of 2.9% to $471.3 billion over the five
companies to replace older, more years to 2022. As companies increasingly
traditional technology. Additionally, use new technology, profit will increase
strong corporate profit for most of the to take up an estimated 7.3% of revenue.
Key External Drivers Private investment in for industry services rises. Private
computers and software investment in computers and software is
Private investment in computers and expected to increase in 2017, presenting a
software represents the total annual potential opportunity to the industry.
expenditure by businesses on all
information processing equipment and Corporate profit
software. Investment by private entities Corporate profit measures total profit
in computer hardware and software earned across all industries in the United
generates demand for implementation States and is positively correlated with
assistance and technical support from the demand for IT consulting services. As
IT Consulting industry. As innovations in corporate profit rises, companies become
product offerings stimulate private more confident about making large,
investment in computer systems, demand long-term investments, encouraging

Key External Drivers them to hire IT consultants. Corporate addition to a subscription that includes a
continued profit is expected to increase in 2017. data plan. As more consumers become
connected to the internet, they will
Government consumption require more assistance with IT systems.
and investment This will lead to a surge in demand for
Federal and state governments constitute the industry, driving up revenue. The
a significant portion of demand for number of mobile internet connections is
industry services. Therefore, the industry expected to rise in 2017.
is sensitive to changes in government
investment. Concerns over the federal Consumer price index
budget deficit have resulted in slower The Consumer Price Index (CPI) is used
growth for government investment, as a measure of inflation from year to year.
thereby constraining spending on IT The CPI contains a basket of goods
consulting by government agencies in ranging from things like transportation to
recent years. Government consumption food. When the CPI rises, consumers must
and investment is expected to increase, use up more of their disposable income on
albeit slowly, in 2017. everyday goods. Since they must use a
higher proportion of their income on these
Number of mobile internet connections goods, they will have less disposable
The number of mobile internet income to spend on IT systems and the
connections represents the total the services behind these products. The CPI is
number of consumers that have a expected to rise in 2017, representing a
broadband internet-capable device in potential threat to the industry.
Private investment in computers and Corporate profit

software
10 28
21
5
14
% change
% change
0
7
-5
0
-10 -7
Year 10 12 14 16 18 20 22 Year 10 12 14 16 18 20 22

Current In a technology-driven environment,

businesses across all industries rely on Industry revenue
Performance external IT support to operate more
10
efficiently. Operators in the IT Consulting
industry implement and deploy systems
5
that manage data on behalf of their
business clients. Moreover, IT
% change
consultants design and modify 0
supporting software to enhance online
and telecommunications security -5
systems. The industry also includes a
wide range of other IT companies, -10
including IT outsourcing and computer Year 09 11 13 15 17 19 21 23
equipment and specialist companies that
design and build the technology SOURCE: WWW.IBISWORLD.COM
infrastructures used by other industry

operators. Due to the wide range of solutions on the premises, which had
IT-related services it provides, this traditionally dominated the industry prior
industry is one of the largest and most to the current five-year period.
resilient in the US economy, Nonetheless, as companies continue to
encompassing over 300,000 businesses shift to cloud computing and increasingly
and boasting annual sales of more than use big data analytics, larger companies
$400.0 billion. In line with favorable that historically provided traditional
economic conditions and business server and software solutions, such as
trends, the IT Consulting industry is IBM and Hewlett-Packard Enterprise
expected to grow at an annualized rate (HPE), have shifted their focus to try to
of 2.1% to $408.2 billion over the five adapt to the changing market. Revenue
years to 2017. During this period, profit also decreased in 2015 due to a 3.0%
margins are expected to reach 7.3% of decline in corporate profit. As corporate
industry revenue. profit decreases, downstream companies
The industry started the current are less willing to hire IT consulting
five-year period with strong growth, as companies; however, revenue growth will
businesses that performed poorly during rebound in 2017, rising 4.1% over the year.
the economic downturn sought IT As new technology gained popularity
services to boost efficiency and over the period, more operators entered
productivity. Stronger corporate profit the industry. Low barriers to entry make
and increasing investment in computers it easy for new companies to enter the
and software have driven growth as industry. Many operators just need
businesses have increased their IT- relevant education and experience,
related budgets. Revenue declined along with the ability to attract clients.
slightly in 2013 with the rapid The number of establishments rose over
development and mainstream adoption the past five years, leading to
of new technologies, such as cloud intensifying internal competition and
computing and big data analytics. These incentivizing greater expenditures on
services severely disrupted the research and new product development
performance of established service as companies tried to stay up-to-date
segments, such as server and software with shifts in the market.

Continued innovation The trend toward cloud computing, a

model in which computer applications The
trend toward cloud
are hosted in outside servers that are computing has benefited
accessible via the internet and managed
by third-party companies, has benefited industry operators
industry operators that have used their
expertise in converged infrastructure flagship cloud platform-as-a-service
solutions to secure projects developing offering, and over $1.2 billion to expand
cloud-computing systems. In response to its cloud centers for its recent acquisition
these rapid shifts in technological trends, company SoftLayer. In 2016 alone,
the industry’s largest players, including acquisitions and research and
IBM and HPE, have increasingly development expenditures reached
switched their focuses toward offering nearly $12.0 billion. Similarly, Hewlett-
third-platform solutions, such as cloud- Packard split into the two companies
based computing and data analytics. For Hewlett-Packard Enterprises (HPE) and
example, IBM divested its entire Hewlett-Packard Inc. (HP Inc.). HPE
microelectronics business, while now focuses on providing industry-
spending $1.0 billion to develop its relevant enterprise IT services.
Industry structure While there are still plenty of Additionally, the five-year period has
opportunities for small-scale IT been characterized by extensive merger and
consultants, industry employment acquisition activity. For example, Accenture
growth over the past five years has been PLC purchased more than 20 companies
concentrated in larger firms. Over the five over the past five years. Additionally, Dell
years to 2017, employment is expected to Inc. purchased EMC Corp. late in the period,
grow at an annualized rate of 3.5% to 2.1 creating a new company, Dell Technologies
million workers. In contrast, the number Inc. Much of the merger and acquisition
of industry enterprises, which measures activity has involved niche companies
the total number of independent IT operating within the third-platform IT
companies, is expected to fall at an segment. Larger companies often acquired
annualized rate of 5.4% to 317,837 smaller niche players to better position
operators over the same period. Growth themselves in the changing market as new
in the number of employees outpaced technologies decrease demand for
growth in the number of enterprises and traditional software and hardware solutions.
establishments, indicating that Despite significant merger and acquisition
companies are increasing their number of activity, overall market share concentration
employees, enabling them to serve a in this industry remains low, with the four
larger client base or provide attention to largest operators expected to account for
existing clients. less than 20.0% of industry revenue in 2017.

Industry The IT Consulting industry is forecast to

experience consistent growth over the
be driven by continued growth in
corporate profit, which is expected to
Outlook next five years. In terms of technological boost private investment in computers
trends, demand for industry services will and software, as well as increasing
be primarily driven by mainstream demand from the finance and insurance
adoption of third-platform services, industry. Overall, the industry is
which encompasses cloud-based projected to grow at an annualized rate of
computing, big data analytics and 2.9% to $471.3 billion over the five years
mobile-based solutions. In terms of to 2022.
economic factors, industry revenue will
Business confidence Over the next five years, corporate profit

and investment is forecast to increase while the total Bothcorporate profit and
number of US businesses is projected to
rise. Growing businesses will seek the
the total number of US
assistance of IT consultants to improve businesses are forecast to
operational efficiency through system increase
upgrades and integration. Furthermore,
increasing technology integration and
product development will surge private the financial services segment. Finally,
investment in computers and software at the percentage of services conducted
an annualized rate of 3.7% over the five online is expected to rise at an
years to 2022. Additionally, demand annualized rate of 8.0% over the five
from finance and insurance, which are years to 2022. As more business
part of the industry’s largest operations are conducted online or
downstream market, will accelerate its through the cloud, demand for industry
growth. This will stimulate demand from services will likely remain high.
Innovation and Big data will continue to drive the as a whole will continue to create an
shifting technological industry over the next five years. A key influx of new entrants that specialize in
driver of industry performance moving new technology. Similar to the current
trends forward is simply the vast growth of the five-year period, larger operators are
world’s data. According to EMC Corp.’s expected to continue acquiring smaller
2015 annual report, the world’s data will businesses and incorporating their
double every two years. This data must solutions into their expansive product
be organized, managed and combed portfolios to stay relevant over the
through to find trends and insights for outlook period.
businesses and government institutions Furthermore, consumers are
alike. Larger operators, such as IBM, increasingly using smartphones and
HPE and Dell Technologies Inc., have the tablet devices to access the internet. Over
necessary human capital, infrastructure the next five years, the number of mobile
and research resources to provide the internet connections is projected to rise
most effective and competitive solutions at an annualized rate of 6.3% to 412.9
to these problems. Conversely, the million connections in 2022. Consumers
rapidly changing nature of the IT sector are using these devices more often as

Innovation and smartphone penetration increases and Over the next five years, security issues
shifting technological telecommunication providers offer faster will remain a top priority. As data
trends continued speeds through Long Term Evolution (LTE) breaches increase in frequency and
network coverage. Faster networks enable intensity, businesses may remain
users to access data-heavy content, including skeptical of big data analytics and cloud-
streaming video, through their devices. As a computing solutions. However, data
result, industry operators are expected to security companies will continue to
experience stronger demand for application develop intuitive solutions to these issues,
and system design, as businesses continue to which will help boost industry revenue.
invest in mobile platforms to reach a younger Overall, favorable shifts in technological
and more technologically savvy demographic innovation and consumer and business
that has already incorporated smartphone preferences will continue to propel the
use into everyday life. industry forward.
Industry structure Due to strong revenue growth and

increasing profit over the five years to 2022, Big
data will continue to
new companies are expected to enter the drive the industry over the
industry at an accelerated rate.
Consequently, over the five years to 2022, next five years
the number of enterprises will increase at an
annualized rate of 2.1% to an estimated ones like IBM. Additionally, employment
352,714 companies, even with the continued growth will continue rising at an annualized
acquisition of smaller operators by larger rate of 2.8% to 2.4 million workers.

Life Cycle Stage Growth in the industry exceeds
that of the overall economy
The industry is constantly developing
new products and services
There is a high level of technological growth
20 Maturity Quality Growth

% Growth in share of economy
Key Features of a Growth Industry

Company High growth in economic
consolidation; importance; weaker companies Revenue grows faster than the economy
level of economic close down; developed Many new companies enter the market
importance stable technology and markets Rapid technology & process change
Growing customer acceptance of product
15 Rapid introduction of products & brands
10
Quantity Growth
Many new companies;
minor growth in economic
importance; substantial
5 IT Consulting technology change
Software Publishing
Computer Stores
0
Computer & Packaged Software Wholesaling

-5 Decline
Shrinking economic
Computer Manufacturing importance
Computer Peripheral Manufacturing
-10
-10 -5 0 5 10 15 20
% Growth in number of establishments

Industry Life Cycle The IT Consulting industry is in the expected to grow further in the latter half
growth stage of its economic life cycle. of the 10-year period as companies
The industry is characterized by revenue increasingly focus on offering newer
This industry growth higher than the overall economy, technologies such as cloud computing
is G
rowing increasing market acceptance of industry and data analytics.
products and a high level of technological A very high degree of technological
change. Over the 10 years to 2022, as and product innovation characterizes the
corporate profit rebounded after industry, and rapid changes in computing
recessionary declines, investment in technology has created significant
computers and software remained a winners and losers during the past five
priority for businesses looking to improve years. By definition, operators in this
efficiency and sales. Additionally, the industry compete on the basis of offering
continued introduction of new products the most efficient and modern
and services has significantly boosted technological solutions to their clients.
demand for industry services. Therefore, operators that stay abreast of
Industry value added (IVA), used to rapidly changing IT trends and quickly
measure an industry’s contribution to the bring the latest technology to the market
overall economy, is forecast to grow at an have a considerable competitive
annualized rate of 4.3% over the 10 years advantage over others. Cloud computing
to 2022. This exceeds growth in the and data analytics have proved high
overall economy, which is projected to growth areas over the five years to 2017
grow by 2.1% over the same 10-year and are expected to continue driving
period. Growth in IVA can be attributed industry performance over the five years
to strong and stable revenue growth and to 2022. Additionally, strong increases in
wages increasing as a proportion of the number of mobile internet
revenue. Additionally, the average connections and greater focus on security
industry profit margin increased slightly will also contribute to the industry’s
over the five years to 2017, and are strong growth over the five years to 2022.

Products & Markets

Supply Chain | Products & Services | Demand Determinants
Major Markets | International Trade | Business Locations
Supply Chain KEY BUYING INDUSTRIES

42 Wholesale Trade in the US
Logistics support is provided to wholesalers to limit costs. Logistics is increasingly automated
and computerized.
51 Information in the US
The merging of IT and telecommunications systems is becoming increasingly common,
requiring the services of IT consultants.
52 Finance and Insurance in the US
Systems and software support and outsourcing are vital in modern financial markets.
62 Healthcare and Social Assistance in the US
Health and community services are becoming more reliant on automation for many services,
and so IT consultants are becoming more commonly used.
92 Public Administration in the US
Government agencies across the United States are increasingly outsourcing IT work, rather
than paying for permanent IT staff.
KEY SELLING INDUSTRIES

33411a Computer Manufacturing in the US
Essential equipment, such as computers, is supplied by this industry.
33411b Computer Peripheral Manufacturing in the US
Essential equipment, such as computer monitors and accessories, is supplied by this industry.
33422 Communication Equipment Manufacturing in the US
Equipment from this industry, such as telephones, is equally important for IT consultants’
day-to-day operations.
51 Information in the US
Advances in the quality and quantity of information in the economy provide IT consultants
with the resources to transform client businesses.
51121 Software Publishing in the US
This industry publishes computer software that IT consultants write, test and support.
Products & Services Custom services a service (SaaS) has quickly become the
Accounting for an estimated 25.1% of model of choice for many clients. Unlike
industry revenue in 2017, custom traditional software packages, SaaS
application design, development and products are sold on a subscription basis
integration services represent the largest via the cloud, which ensures industry
group of service provided by operators. operators a steady stream of revenue
Application software enables companies from software users. Similarly, SaaS
to retrieve, organize, manage and benefits businesses by minimizing initial
manipulate data and databases to meet setup, hardware and technical support
their individual needs. Small and costs. Over the five years to 2017, this
medium-sized companies are segment has remained steady as a
increasingly relying on experts to create percentage of revenue.
custom software or to adapt existing
applications to their needs. Over the past IT infrastructure
five years, a software licensing and Network infrastructure design and
integration method known as software as management services will generate an

Products & Markets
Products & Services Products and services segmentation (2017)

continued
10.0 %
25.1%
Technical consulting
10.7% Custom services

Technical support
12.4%
Computer systems
development
22.8%
19.0% Other services
IT infrastructure
Total $408.2bn SOURCE: WWW.IBISWORLD.COM
estimated 19.0% of revenue in 2017. develop on-premise data security systems

This segment includes managing and to prevent data theft and security
monitoring client IT infrastructure breaches. System integration includes the
performance, data routing and security process of amalgamating different system
on a regular basis. Complex network components so that they act as one
infrastructures require manual routing coordinated whole. Consultants aid
of the paths data is sent on, making this companies by providing advice and
an important network management implementing processes that permit
service. Security management protects a different computer systems to function
network from unauthorized access, and collectively. Businesses that sell software,
includes sub-functions such as hardware or data hosting as individual
authorizing subscriber access and licenses are not included in this product
controlling the distribution of segment; however, a company that sells a
cryptographic keying material (See portfolio of integrated software and
IBISWorld report 51121f). Over the past hardware solutions is included as part of
five years, this service segment’s share of this segment.
revenue has declined slightly due to Over the past five years, technological
widespread adoption of infrastructure- innovation has drastically altered this
as-a-service platforms and hybrid cloud segment’s portfolio of services. In
systems, which shifts the responsibility particular, rapidly growing demand for
of network management from public and hybrid cloud systems,
businesses to the cloud system designer. infrastructure-as-a-service (IaaS) and
platform-as-a-service (PaaS) services
Computer systems development have significantly reduced demand for
Systems design, development and traditional (e.g. on-premise servers)
integration services are expected to services. Using these technologies,
account for 12.4% of industry revenue in industry operators can design a centrally
2017. Typical services within this located megaserver that simultaneously
segment include building on-premise manages the computing needs of multiple
servers and storage devices to help a businesses, instead of placing a separate
company more effectively manage computer system within each client’s
information. In addition, operators building. Rapid improvements in

Products & Markets
Products & Services hardware capability and virtualization Technical consulting

continued software (see Technology and Systems Technical consulting services account for
section) have enabled operators to expand 10.0% of the industry’s revenue. This
these services significantly during the past segment includes strategic management
five years at the expense of traditional consulting and advice related to the use
computer systems services. Overall, these of IT, including hardware and software
disruptive technological developments requirements as well as procurement
have hampered demand for traditional systems, systems integration and
services, leading to this category declining security. This enables clients to
as a percentage of total revenue. troubleshoot problems by using software
or computer hardware; however, this
Technical support does not include technical support
Technical support services are estimated bundled with maintenance and repair
to generate 10.7% of industry revenue in services for computer hardware.
2017. This service area includes providing Technical consulting has increased as a
technical expertise to solve problems share revenue over the past five years due
related to software, hardware or entire to strong demand for IT outsourcing and
computer systems. Technical support integration services.
bundled with maintenance and repair
service for computer hardware is Other services
excluded from this category. Although a All other IT services account for the
large amount of technical support remaining 22.8% of the industry. This
services has been moved offshore over miscellaneous category includes domain
the past decade, this trend has primarily name registration, custom database
affected bundled support services. Over design and development, website design
the past five years, this segment has and development, temporary technical
decreased as a percentage of revenue due staffing, disaster data recovery, licensing
to improvements in the ease with which rights and resale of computer hardware
nonexperts can use new technologies. and software.
Demand Demand for industry services is based on maintain a positive outlook. In periods of
Determinants a variety of factors, including the declining profit and poor business
development of new IT products, demand confidence, companies reduce new
for in-house IT support, business profit purchases and outgoing expenses. This
and merger and acquisition activity. includes payments to external
Cyclical factors play a large role in consultants such as IT consultants.
industry demand, influencing business Business profit is expected to improve
profit and cash flow and the resources over the next five years, which will likely
companies are able to devote toward increase demand for industry services.
upgrading their IT systems. However, the IT Consulting industry also
demonstrates countercyclical trends.
Business profit and confidence Although companies may reduce
Demand for IT consulting services expenditure on new IT and associated
benefits from higher business profit and consultants in times of financial duress,
confidence. Businesses are more likely to businesses are also likely to focus on
invest in new computing infrastructure improving efficiency to increase
when profit is high and businesses profitability. This includes improvements

Products & Markets
Demand to systems and processes such as In-house IT support versus

Determinants computer databases, network outside consultants
infrastructure and office software. Demand for industry services is
continued
negatively correlated with the use of
New IT products in-house IT support teams. For example,
Demand for industry services is highly a company with an internal technical
sensitive to continued development of support or procurement team is unlikely
new hardware and software products. An to seek the services of external IT
increase in the speed and development of companies. In this case, a company may
technology requires businesses to prefer to assemble IT systems internally,
establish and upgrade their IT systems. rather than purchase services from an IT
As a result, companies will need the help consultant. However, because
of IT consultants to recommend the best technology evolves rapidly, many
strategies to improve their systems. companies view the outsourcing of IT
Industry operators must rapidly assess consulting services as a necessary and
the relevance of innovations or they will more efficient alternative. In particular,
not remain as competitive as more small to medium-sized companies often
technologically savvy companies. Over turn to outside consultants for IT
the past five years, rapid adoption of consulting services. Smaller companies
third-platform IT solutions, which do not require constant system
include big data analytics and cloud upgrades and find it more practical to
computing, has increased the need for IT pay a one-time consulting fee.
consulting in these areas. Over the next Conversely, larger companies often
five years, demand for industry services have the ability and the need to
will likely remain strong as digital establish their own internal services,
technology continues to drive the global which reduces their demand for IT
economy forward. support services from consultants.
Major Markets The private business sector accounts for and credit card issuing companies. Since
more than three-fourths of IT consulting operators in the financial services
revenue, with the largest client bases in industry are responsible for protecting
the financial services, manufacturing and sensitive client information, they depend
retail, communications, technical and on IT consultants to protect the privacy
healthcare industries as well as federal, of this information. Furthermore,
state and local governments and because an increasing proportion of
nonprofit organizations. The remaining financial transactions are automated
22.1% of revenue comes from a variety of through algorithmic trading systems,
other industries. operators in this industry require
advanced data processing capabilities
Financial services and fast, reliable network connections.
Financial service providers are the largest For example, banks rely on IT
consumers of IT consulting services by consultants to reduce identity theft
revenue, contributing 19.6% to industry through more secure client verification
sales in 2017. Major client groups within systems. This segment’s share of industry
this sector include commercial banks, revenue has remained steady over the
investment banks, insurance companies past five years.

Products & Markets
Major Markets Major market segmentation (2017)

continued
10.9%
Healthcare sector 22.2%
Other sectors
11.2%
Communications and other
17.3% 19.6%
Manufacturing and retail Financial services
18.8%
Total $408.2bn Public sector and nonprofits
Public sector and nonprofits Manufacturing and retail

The public sector and nonprofit Manufacturing and retail customers
organizations account for an estimated collectively generate 17.3% of industry
18.8% of industry revenue. The public revenue. Retailers and manufacturers
sector includes, federal, state and local depend on the IT Consulting industry’s
governments. The federal governments products and services for the installation
accounts for the majority of revenue and maintenance of their point of sale
from this segment. The federal systems, logistics, and inventory
government requires IT consultants in management systems. Innovations in the
areas including defense systems, social efficiency and security of these systems
security, benefits administration and help manufacturers and retailers reduce
Medicare. Major government clients costs, enabling them to be more
include the Department of Energy, competitive. Retailers use industry
Department of Defense, the Army and services to notify them when their
the Department of Homeland Security. inventory is low so they can order new
Additionally, IT consulting services are products. In addition, retailers are
required to maintain the information increasingly seeking the help of industry
systems of state-run agencies operators to design and integrate online
including schools, colleges and retail channels. Similarly, manufacturers
universities. As a result, industry use industry services to gain insight from
revenue is closely linked to retail data, develop just-in-time inventory
government consumption and systems and reduce logistical costs
investment via public sector consulting associated with global supply chains.
demand. During the past five years, This market’s ability to spend on IT is
government consumption and highly cyclical and demand is closely
investment decreased. This, coupled linked to the levels of consumer
with concerns over state budgets has disposable income and spending. As
reduced demand from the public sector disposable income has rebounded over
and led to a decrease of this segment the past five years, this segment has
as a percentage of revenue. increased as a percentage of revenue.

Products & Markets
Major Markets Communications and other this segment, growth was slower than
continued technical sectors other segments, which decreased this
Telecommunications is a rapidly segment’s percentage of revenue.
changing field, which is strongly
influenced by technological change. Healthcare sector
Similarly, high technology industries The healthcare sector is expected to
(e.g. consumer electronics account for 10.9% of industry revenue in
manufacturers, aerospace and defense) 2017. Demand from this segment is
rely on IT consultants to facilitate their driven primarily by increased healthcare
research and development activities. expenditure, rising regulatory compliance
Overall, communications and high costs and increased outsourcing of
technology make up 11.2% of industry electronic medical records management
revenue. Technology is constantly to outside providers. In particular,
evolving and the need for faster systems compliance costs associated with the
is always a priority. For example, an IT Affordable Care Act and state-level health
consultant can help a mobile phone insurance exchanges have been a primary
company implement more reliable cell driver of rising demand during the past
phone internet service by analyzing five years. Additionally, increased total
coverage area maps and consumer usage health expenditure has increased demand
trends. Communications and high for healthcare services, which has
technology industries are expected to subsequently boosted demand for
grow steadily as a proportion of industry computer systems design, network
revenue over the next five years. management and IT support services
However, despite rising revenue from from this sector.
International Trade International trade does not occur in this labor, particularly in the areas of software
industry due to the service-based nature programming and technical support, to
of its activities. However, globalization India, the Philippines and other countries
has helped large consulting firms that where labor costs are relatively lower.
service multinational corporations Although these services are effectively
maintain an international presence. “imported” to the United States, they are
Additionally, many US-based IT not recorded by the US International
companies offshore some portion of their Trade Commission.

Products & Markets
Business Locations 2017
West
AK
0.1 New
England
ME
Great Mid- 0.3
Lakes Atlantic 1 2
NY 3
WA MT ND 6.1
5 4
2.5 0.1 MN
Rocky
0.3 2.4
WI
OR Mountains SD
0.1
Plains 1.2 MI
2.0
PA
3.3
6
7
1.1 ID IA OH 9 8
0.3 WY 2.6
0.1
NE
0.5
IL IN WV VA
4.8 1.2 6.7
West NV
0.5 0.2
KY
UT MO
0.6 NC
0.9
1.0 CO KS 1.3 2.6
3.2 0.7 TN
SC
Southeast
0.9
CA 0.8
14.3
OK AR GA
0.6 0.3 AL 4.0
AZ MS 0.8
1.6 NM
0.4 Southwest 0.3
TX LA
0.6 FL
7.8 6.2
West
HI
0.3 Additional States (as marked on map) Establishments (%)
1 VT 2 NH 3 MA 4 RI Less than 3%
0.2 0.5 2.7 0.3 3% to less than 10%
10% to less than 20%
5 CT 6 NJ 7 DE 8 MD 9 DC
20% or more
0.9 5.1 0.5 3.7 0.7

Products & Markets
Business Locations The distribution of IT consulting

Distribution of establishments vs. population
establishments generally reflects the US
population distribution with increased
30
consulting density near technological
centers and key demand markets,
including financial service companies, 20
large corporations and government
clients. Most IT consulting companies are
%
located in the Southeast, closely followed 10
by the Mid-Atlantic and the West.
Southeast 0
The Southeast contains the largest
West
Great Lakes
Mid-Atlantic
New England
Plains
Rocky Mountains
Southeast
Southwest
number of IT consulting firms, with 23.9%
of industry establishments. Many IT
consulting firms are in this region because
25.7% of the US population resides in this Establishments
region. The financial services companies Population
are the largest downstream market for the SOURCE: WWW.IBISWORLD.COM
IT Consulting industry. It includes banks,

capital markets and insurance companies
The Southeast regions contains the largest West
number of commercial banks with The West is a prominent location for IT
28.4% (IBISWorld report 52211) as well consulting companies, tying the Mid-
as insurance agencies and brokers with Atlantic with 19.3% of industry
24.9% (IBISWorld report 52421). By establishments in 2017. California is
positioning themselves in the home to the Silicon Valley, which is one
Southeast, IT consulting firms improve of the largest centers of high technology
their ability to capitalize on these key companies. Accordingly, California
downstream markets. represents 14.3% of industry
establishments. The region is also home
Mid-Atlantic to 17.3% of the US population, which
The Mid-Atlantic has the second-largest provides operators to access to a large
share of industry establishments. In supply of skilled labor.
2017, 19.3% of industry establishments
are estimated to be located in the Mid- Other
Atlantic region. A large number of IT Regions with a disproportionately small
consultants are located in this region due number of industry establishments on a
to the large number of financial services per capita basis include the Great Lakes
companies located in New York, which and Southwest regions. This is due to the
accounts for 6.1% of total low level of business penetration in the
establishments. New York also contains Great Lakes with 11.8% of establishments
5.3% of wireless telecommunication and the Southwest containing 10.4% of
carriers (IBISWorld report 51721), such establishments. A crucial exception in the
as Verizon Wireless and AT&T Southwest region is Texas, which ranks
Communications. Communications, second in establishments with 7.8%.
media and technology companies are the Texas contains large cities such as Dallas
fourth largest downstream market for and Houston, both of which have offices
industry operators. of many consulting firms.

Competitive Landscape
Market Share Concentration | Key Success Factors | Cost Structure Benchmarks
Basis of Competition | Barriers to Entry | Industry Globalization
Market Share Despite the presence of numerous ever-growing number of products and
Concentration high-profile global corporations, the services offered by the industry.
industry’s sheer size and vast portfolio of Furthermore, the nature of services
disparate services prevents any one provided permits up-and-coming firms
Level
company from dominating the industry that specialize in a recently introduced
Concentration in as a whole. In fact, the industry includes: technology to quickly capture a chunk of
this industry is L ow network infrastructure companies, IT the IT market at the expense of more
outsourcing companies, traditional large established competitors. Accordingly,
consulting firms, specialized software IBM’s market share has decreased during
development organizations and a wide the past five years, as its revenue growth
range of other companies that do not has lagged behind that of the overall
necessarily compete directly with one industry despite several acquisitions and
another but offer some type of service continued investment in new products.
related to IT. The largest of these Conversely, relatively smaller companies,
companies is International Business such as Dell Technologies, Inc., which
Machines Corporation (IBM), which is was formed from the merger of EMC
expected to generate $10.5 billion in Corp and Dell, Inc. have grown over the
industry-relevant revenue in 2017, past five years as a result of favorable
despite accounting for just 2.6% of shifts in technology trends that have
market share in the same year. Similarly, boosted demand for their product or
global conglomerate Hewlett-Packard service lines.
Enterprise (HPE) will account for less Some consolidation has occurred over the
than a 5.0% share of industry revenue in past five years, driven primarily by major
2017, despite generating $9.6 billion in players acquiring smaller competitors.
industry-relevant revenue. Overall, the However, the industry is still primarily
four largest companies in the industry composed of small business. Industry
are estimated to generate just 8.4% of structure is expected to change steadily over
industry revenue in 2017. the next five years, as rapidly evolving
Rapid technological developments, technology will continue to encourage new
particularly within cloud infrastructure businesses with specialization in specific
and mobile computing, have significantly fields to enter the market. At the same time,
disrupted the industry over the past five companies that rely on obsolete
years. In particular, these developments technologies will likely have to merge with
have encouraged dozens of specialty competitors or exit the industry altogether.
companies to enter the industry and Major players will continue to acquire
quickly create a niche market for their successful small players, but the nature of
services. The industry is becoming IT services will ensure that the industry
increasingly fragmented due to the remains fragmented.
Key Success Factors Adoption of a commercial focus crucial to attracting clients in a dynamic
Highly technical and service-based technological environment. Clients expect
industries, such as IT consulting, need state-of-the-art service and equipment.
IBISWorld identifies to tailor their expertise to the clients
250 Key Success Access to highly skilled workforce
Factors for a Access to efficient technology & techniques The industry is reliant on skilled labor, since
business. The most Access to and an understanding of the latest computing power alone is insufficient to
hardware and software systems can be develop solutions for clients’ IT needs.
important for this
industry are:
Key Success Factors Effective cost controls Effective and efficient project
continued Ensuring that a project is within budget management skills
greatly contributes to a firm’s reputation for The client’s project needs to be
performance. Clients tend to enter into a managed well and with good, clear and
project on a budget and not meeting that open lines of communication between
standard can be deemed a failure. the industry operator and the client.
Cost Structure Cost structures in the IT Consulting maintain low prices for services, which
Benchmarks industry can vary greatly depending on may constrain profit margins. Overall,
the type of products and services offered IBISWorld estimates that average profit
and the markets the firm caters to. In margins will increase slightly over the
addition, there is a large disparity between next five years, with strong demand for
the industry’s largest and smallest firms. higher-margin IT services partially offset
For example, global companies such as by increased price-based competition
IBM and Accenture PLC, which provide a among larger companies.
wide range of IT consulting, system design
and integration services across all market Wages
sectors, have a considerably different cost As with most service-oriented industries,
breakdown than small tech support wages represent the largest cost incurred
companies that operate locally. The by industry operators. Wages are expected
following cost structure benchmarks account for 46.9% of industry revenue in
illustrate the average costs across all 2017, up from 39.3% in 20112. Over the
industry operators. past five years, wages have increased as a
share of revenue due to strong demand for
Profit IT services, which has boosted new hiring
Average industry profit, as measured by across the industry. As companies invested
earnings before interest and taxes, is in new technology over the period,
expected to account for 7.3% of industry operators have increasingly sought highly
revenue in 2017. Over the past five years, skilled computer and software engineers
profit has increased from 7.1% in 2012. with terminal degrees, experienced
Moving forward, as clients continue to consultants and other well-trained
rely on data management and other employees to remain competitive despite
digital technology solutions to drive rapid technological change. Additionally,
business, increased demand for IT operators have also had to increasingly
consulting services will permit operators experience demand for skilled labor from
to increase fees while sustaining a other industries. The growing trend of
growing number of clients. Additionally, entrepreneurship in the country has
major companies are expected to increased demand for skilled labor, such
continue to shift the balance of their as software engineers, that the IT
services toward higher value-added Consulting industry uses. Consequently,
offerings, such as infrastructure-as-a- operators have had to compete more
service (IaaS) and other cloud-based heavily with external companies for the
services. These services are generally same employees. These trends have
more profitable for operators than their boosted the average wage per worker to
traditional counterparts. However, $91,203, which has subsequently driven
intensifying competition among major up wages’ share of industry revenue over
players will likely pressure operators to the five-year period.

Cost Structure Purchases Other costs

Benchmarks Purchases within the IT Consulting industry Rent and utilities within the industry
make up an estimated 13.4% of expenditures. account for an estimated 4.5% of
continued
The majority of purchases are attributable to revenue, while marketing costs make
computer hardware and software used in the up 2.2% of the industry’s revenue. For
production of integrated systems or resold to very large and very profitable firms,
clients because of consulting and tech this proportion is typically higher.
support activities. In the case of integrated Companies that provide IT consulting
systems, components are frequently services to the government and large
purchased internally from a company’s own private enterprises bid for contracts on
software or hardware divisions. Since very a cost basis, but also compete based on
few of the other industries in the firm reputation and service
Professional, Scientific and Technical innovations. Due to the often-
Services sector are engaged in the resale of subjective nature of reputation and
merchandise, the IT Consulting industry’s innovation, firms devote significant
purchases category exceeds the average for resources toward informing clients
the sector. During the next five years, about their latest product and service
purchases’ share of industry revenue is offerings through their marketing
expected to rise as clients increasingly seek budgets. Depreciation costs for the
industry operators with both software and industry are extremely low, making up
hardware designing capabilities. just 0.6% of revenue.
Sector vs. Industry Costs
Average Costs of
all Industries in Industry Costs
sector (2017) (2017)
100 n Profit
13.2 7.3 n Wages
n Purchases
80 n Depreciation
n Marketing
46.9 n Rent & Utilities
42.6 n Other
Percentage of revenue
60
40
11.4 13.4
1.3 1.6 0.6 2.2
4.6 4.5
20
24.8 25.1
0

Basis of Competition Internal competition External competition

Competition within the industry is based Competition for IT consulting projects has
primarily on technical expertise, quality recently increased from companies in other
Level & Trend of service, availability of value-added industries. The services provided by the
ompetition
C in services and, to a lesser extent, price. IT Management Consulting industry
this industry is consulting firms increasingly advertise as (IBISWorld report 54161) increasingly
Highand the trend one-stop shops, boasting an ability to overlap with this industry, as IT has become
provide insight and implementation all of more relevant to management, production
is I ncreasing
a client’s IT needs. This service and logistics strategy. In addition to
innovation appeals not only to large, competition from consulting firms external
complex corporations but also to smaller to the industry, IT consultants contend with
clients without the resources to evaluate competition from the in-house capacities of
new consulting bids at every stage of their clients. When businesses outsource IT
their project. In this area, consolidation consulting, industry revenue increases. In
among major companies shows that firms contrast, growth in the in-house IT and
seek to gain a competitive advantage over consulting departments of large
other operators by expanding their corporations places a limit on consultancy
service base, often through mergers and outsourcing, causing industry revenue to
acquisitions. Additionally, the ability for decrease. While outsourcing does not
senior IT consultants to directly approach depend exclusively on good economic
current and potential clients can also be a conditions, weakening of business
competitive advantage. Those who can confidence may cause companies to
foster long-term relationships with terminate external consulting contracts in
clients not only maintain a strong client favor of smaller, in-house solutions. Firms
base but also boost a company’s also experience competition from hardware
reputation. Generally, IT consultants rely and software companies that develop
on previous clients’ work to obtain future enterprise software packages, though the
business through referrals and also level of external competition from this
through recommendations. industry has waned in recent years.

Barriers to Entry The IT Consulting industry experiences a

low level of regulation and minimal Barriers to Entry checklist
Level & Trend startup costs, which encourages new Competition High
companies to continually enter the Concentration Low
arriers to Entry
B market. Since the industry is so labor Life Cycle Stage Growth
in this industry are intensive, establishing a firm requires Capital Intensity Low
Lowand I ncreasing only that the business owner possess Technology Change High
knowledge and experience in the field Regulation & Policy Light
and a functioning IT system. For industry Industry Assistance Low
entrants hoping to establish a sole
proprietorship, the primary barriers to SOURCE: WWW.IBISWORLD.COM
entry are educational experience in a

relevant computer science discipline and clients. New entrants, by contrast,
the ability to attract clients. Although tend to be highly specialized in a
developing a network of clients who can certain skill set. For example, smaller
provide a regular flow of work can be a firms can offer tailored services
significant challenge, this is a challenge including disaster recovery, database
many in the industry have taken on, with integration and maintenance and
the majority of establishments classified online retail development. These firms
as small, nonemployer firms. However, experience lower overhead costs and
despite their large numbers, these can provide services in geographic
nonemployer firms generate a small locations underserved by large
portion of the industry’s overall revenue. corporate IT consulting operators.
While larger players such as IBM Furthermore, rather than compete with
and HPE bring strong brand major players, new entrants often rely on
recognition, these companies tend to larger firms for services in developing
target big-name clients, and offer their own businesses. For example, a
services across a wide variety of small company intending to enter the
industries and activities. Such firms platform-as-a-service (PaaS) segment may
bring a high-capacity worldwide purchase server infrastructure from IBM
network of offices and can provide and data storage devices from NetApp,
services on a global basis. In the even though the new entrant will
market for large corporate clients, compete directly with these three
brand-recognition and scale are companies once it is established. In fact,
substantial barriers to entry. In the ability to integrate existing
general, firms entering the industry technologies to create a new value-added
cannot expect to compete with these service is a commonplace occurrence
operators, particularly for high-value within this industry.
Industry Due to the inherently globalized nature of player IBM has direct operations in over
Globalization IT and digitalization, a very high level of 175 countries, while Accenture PLC has
industry globalization characterizes this offices in 55 countries. In addition to
industry. The majority of major players having offices located outside of the
Level & Trend are publicly owned companies with a United States, these companies often
lobalization
G in global presence. In fact, many larger send US-based consultants to foreign
this industry is companies have international operations countries to assist on projects or
Highand the trend in multiple countries. For example, major outsource some of their labor
is I ncreasing
Industry requirements to foreign countries, United States significantly over the past
Globalization increasing the amount of globalization five years, with North American
in the industry. operations accounting for almost 30.0%
continued
In addition to domestic companies of total revenue in 2015. Overall, the
branching out into international industry is expected to continue
markets, several foreign companies globalizing over the next five years, as
have entered the US market in recent the global economy becomes ever more
years. For example, the French IT digitalized and industries increasingly
outsourcing company Cap Gemini S.A. rely on international markets for
has expanded operations into the supplies and sales.

Major Companies
There are no Major Players in this industry | Other Companies
Other Companies The IT Consulting industry is composed included in this industry (see IBISWorld
of dozens of known multinational report 54161).
companies dominating high-end One of Accenture’s major
corporate sales and thousands of smaller differentiation areas is its strategic global
firms specializing in a specific delivery model, which enables the
technological platform, skillset or company to benefit from using people
geographic area. Accordingly, the and resources worldwide. Accenture’s
industry remains highly fragmented. global structure enables its offices to
Although the following companies each communicate easily with another.
generate less than 5.0% of industry Moreover, the global network qualifies
revenue, they represent major Accenture professionals working at client
participants with a considerable influence sites across the globe to deliver solutions
on the industry’s competitive landscape to their local geographic area, enabling
and overall direction. In addition to the increased service speed and
following listed operators, other major specialization for more regions.
tech companies that have a significant The company has also grown through
presence in this industry include Amazon acquisitions. Over the past five years,
Web Services Inc., Cisco Systems Inc., Accenture purchased more than 20
Google, Microsoft Corporation, Oracle companies. Although the majority of these
Corporation and SAP SE. companies are based outside of the United
States, industry-relevant purchases
Accenture PLC include Clearhead in 2017, Cybersecurity
Estimated market share: 3.5% Defense Services in 2016, Cimation and
Accenture PLC (Accenture) provides Cloud Sherpas in 2015, Mortgage Cadence
management consulting and technology in 2013 and Octagon Research Solutions
services, as well as outsourcing services. Inc. in 2012. Additionally, in October
The company grew from the collapse of 2015, Amazon.com Inc. and Accenture
Arthur Andersen Consulting in the wake announced that they would be forming a
of the Enron Corp. scandal. Since the venture to help corporations move
split, Accenture has increasingly focused technology operations onto the cloud.
on providing management and IT IBISWorld expects the venture to further
consulting services to its clients. In fiscal increase Accenture’s presence in cloud
2017, Accenture generated $34.8 billion services. Since Accenture is a large
in global revenue and employed more multinational company, it generates only
than 400,000 workers across all business 48.3% of its revenue in the United States.
segments. The company segments its In 2017, IBISWorld expects Accenture to
operations across service industries, generate $14.2 billion in industry-
which include communications, media relevant revenue.
and technology, financial services, health
and public service, products and International Business Machines
resources. Under these broad categories, Corp.
Accenture serves 13 different industry Estimated market share: 2.6%
groups. In terms of operating divisions, Established in 1911, International
the company participates in this industry Business Machines Corp. (IBM) is a
via its Accenture Digital, Accenture diversified, US-based, global IT company
Operations and Accenture Technology that provides hardware, software,
brands; the Accenture Strategy business infrastructure, hosting and consulting
segment primarily offers management services. The company operates across all
consulting services and is therefore not industry service segments and offers

Major Companies
Other Companies solutions to a broad range of private services division. In 2014, the company
continued business, government and nonprofit signed a major deal with social media site
clients. In addition to its own sales and Twitter to build systems that will be able
distribution networks, IBM offers its to analyze Twitter’s data. This will enable
products and services through a variety IBM’s customers to gain real-time
of third-party business partners, feedback and improve business making
including distributors and resellers. decisions. In 2016, IBM acquired or
Headquartered in New York, IBM and its announced plans to purchase multiple
subsidiaries employ over 380,000 people industry relevant companies, including,
across more than 175 countries. but not limited to, Bluewolf, a leader in
IBM’s global technology services, cloud consulting and implementation
software and systems hardware segments services; Optevia, a software as a service
are all involved in industry operations. (SaaS) company focusing on customer
These divisions deliver products and relationship management solutions; and
services in the areas of consulting, security company Resilient Systems Inc.
integrated hardware and software So far in 2017, IBM has acquired Verizon
solutions and application-management cloud services, which is involved in cloud
services. The global technology services data and deployment services, and Agile
segment helps companies use technology 3 Solutions, which offers a product suite
to drive business innovation and create for businesses to govern risk and
growth while optimizing IT organization. compliance within the IT realm.
It also provides IT outsourcing, Over the five years to 2017, IBM’s
consulting and systems integration industry-relevant revenue is estimated to
services. The software division provides decrease at an annualized rate of 2.2% to
operating systems and software to $10.5 billion. Although IBM experienced
connect operating systems and strong growth early on in the five-year
applications. Finally, the company’s period, overall financial performance has
systems hardware division provides trended downward over the past five
infrastructure technology so clients can years due to weaker demand for its
meet new hardware requirements from technology and consulting services. The
changing technology, such as using the company has lagged behind the overall
cloud to deliver services. industry, as it has focused on acquisitions
One of IBM’s biggest transactions over and growth in other business segments
the past decade was the sale of its over the period. However, IBISWorld
personal computer business to Lenovo in expects IBM’s share of the industry to
2005. The company divested from the increase over the five years to 2022, as
production of physical computer the company continues to acquire smaller
components to focus on software. As a competitors and invest in new technology
result, IBM has made dozens of platforms to adopt to new market trends.
acquisitions focusing on software
companies over the past five years. In Hewlett-Packard Enterprise
2012, IBM purchased Kenexa for $1.3 Estimated market share: 2.3%
billion, which increased IBM’s market Hewlett-Packard Enterprise (HPE) is a
share in human resources software. In global technology corporation that
mid-2013, IBM purchased the cloud provides a wide range of enterprise IT
computing company SoftLayer solutions to commercial clients, including
Technologies Inc. for $2.0 billion. The systems integration, software design,
acquisition of SoftLayer Technologies storage and networking. HPE was created
Inc. also helped form the IBM cloud in late 2015 when it was spun off from

Major Companies
Other Companies Hewlett-Packard Company. After the decrease in contract prices for its
continued split, the newly formed HP Inc. assumed enterprise services, which is the
the consumer electronics side of the company’s largest single industry-specific
business, while HPE took over the revenue segment. Additionally, although
industry-relevant enterprises services HPE realized strong growth for its
and software development segment, as Software products early in the period, the
well as networking services included in industry’s switch to software as a service
the Telecommunication Networking (SaaS) has hampered revenue. Overall,
Equipment Manufacturing industry industry-relevant revenue is expected to
(IBISWorld report 33421). reach $9.6 billion in fiscal 2017.
Headquartered in Palo Alto, CA, the
company employs 195,000 people. HPE Dell Technologies Inc.
operates under five business segments: Estimated market share: Less than 1.0%
the enterprise group, enterprise services, Formed in 2016 from the merger of Dell
software, financial services and corporate Inc. and EMC Corp., Dell Technologies
investments. The company participates in Inc. (Dell Technologies) provides
this industry via part of its enterprise technology solutions and services to
group, software, and enterprise services, accelerate digital transformation.
which provide IT infrastructure and According to Dell Technologies, the
related services to large business, merger has created the world’s largest
government and nonprofit clients. The privately controlled technology company.
enterprise group provides consulting and Dell Technologies is headquartered in
support services for hardware and Round Rock, TX; its brands include Dell,
software. The software division supports Dell EMC, Pivotal, RSA, SecureWorks,
clients through big data analytics and Virtustream and VMware. Before the
applications, enterprise security, merger, both Dell Inc. and EMC Corp.
application testing and delivery operated in the IT Consulting industry.
management and IT operations EMC Corp. had originally participated in
management solutions. The enterprise the industry through its services provided
services segment provides technology by its business segments, which included
consulting, outsourcing and support information storage, information
services for infrastructure, applications intelligence group, RSA information
and business processes. security, Pivotal products and VMware
Like its larger competitor IBM, HPE virtual and cloud infrastructure. The
has also recently restructured and company’s information storage segment
refocused its operations toward software, offered a portfolio of custom-integrated
big data, cloud and mobile computing software, storage, backup and recovery
solutions. Over the past five years, the and management solutions to
company has acquired several other organizations with a variety of storage
companies, including Nimble Storage, needs. Dell Inc.’s services had originally
Cloud Cruiser, SimpliVity, Trilead, Silicon included support, deployment,
Graphics, Voltage Security and 3PAR. infrastructure, cloud, security,
Despite these acquisitions, declining applications and business process
revenue in the United States has services. Both companies had performed
hampered expansion efforts and resulted well over the period due to favorable
in a shrinking market share over the past technology trends. Consequently, in fiscal
five years. The company experienced 2017, Dell Technologies is estimated to
decreasing revenue due to the winding generate $1.7 billion in US, industry-
down of multiple large contracts and a relevant revenue.

Operating Conditions
Capital Intensity | Technology & Systems | Revenue Volatility
Regulation & Policy | Industry Assistance
Capital Intensity The IT Consulting industry has a very low

level of capital intensity. For every dollar Capital intensity
Capital units per labor unit
spent on labor in 2017, industry
Level
operators are estimated to spend just 0.5
The levelof capital $0.01 on capital, down over the five-year
intensity is L ow period from $0.02 in 2012. Although 0.4
some segments within the industry may 0.3

assemble and market enterprise systems
that require expensive hardware, the 0.2
industry as a whole is a very labor- 0.1

intensive, service-oriented industry. The
high share of revenue devoted to labor 0.0
Economy Professional, IT Consulting
costs reflects the service-oriented nature Scientific &
Technical Services
of IT consulting and the high level of Dotted line shows a high level of capital intensity
education required of personnel. Larger SOURCE: WWW.IBISWORLD.COM
firms in the industry are more labor

intensive because they employ more Capital equipment costs in the
high-skilled staff, which increases a firm’s industry are relatively low because there
credibility to clients. is minimal equipment required to
Tools of the Trade: Growth Strategies for Success
New Age Economy Investment Economy

Recreation, Personal Services, Information, Communications,
Health and Education. Firms Mining, Finance and Real
benefit from personal wealth so Estate. To increase revenue
stable macroeconomic conditions firms need superior debt
are imperative. Brand awareness management, a stable
and niche labor skills are key to macroeconomic environment
product differentiation. and a sound investment plan.
Capital Intensive
Labor Intensive
Communication Equipment Manufacturing
IT Consulting
Software Publishing
Traditional Service Economy Computer & Packaged Software Wholesaling Old Economy
Wholesale and Retail. Reliant Computer Manufacturing Agriculture and Manufacturing.
on labor rather than capital to Traded goods can be produced
sell goods. Functions cannot Computer Peripheral Manufacturing using cheap labor abroad.
be outsourced therefore firms To expand firms must merge
must use new technology or acquire others to exploit
or improve staff training to economies of scale, or specialize
increase revenue growth. in niche, high-value products.
Change in Share of the Economy SOURCE: WWW.IBISWORLD.COM

Capital Intensity perform designated tasks. Software tends analytics, hybrid cloud solutions and
continued to have a relatively short life cycle relative mobile computing. The continually
to most other goods. Most application evolving nature of industry services
programs require an update after one to requires an ongoing commitment by
five years, meaning that IT consultants operators to invest in staff and knowledge,
must constantly innovate to remain research and development and state-of-
competitive. The industry as a whole has the-art hardware and software. Capital
undergone significant restructuring investment for this industry largely relates
during the past five years, driven primarily to the use of computing hardware and
by rapid developments in big data associated peripherals.
Technology & Systems The IT Consulting industry uses microelectronics division to focus more on
technology to help clients operate their its global services, software and system and
Level businesses more efficiently. Because technology segments. Similarly, Hewlett-
computer technology is constantly being Packard Company has recently completed
The level
of updated and revised, operators must the spinoff of its entire consumer
Technology regularly update the scope of their electronics business into a separate
Change is H
igh expertise and services to meet client company, with the remaining divisions
needs. Accordingly, the industry is focused entirely on enterprise services.
subject to a very high level of Furthermore, innovations in the field of
technological change. Indeed, regular cloud computing have given major
technological innovation has disrupted companies an avenue into more profitable
the industry as a whole several times IT consulting services. This recent
during the past two decades. technological breakthrough is known as
The technology used in this industry the ‘third-platform,’ which encompasses
relates to both computer hardware and industry services such as big data
software (including language and analytics, cloud storage and mobile
applications). The relative prices of these integration. In addition to cloud
tools are continuing to decline, even computing, growth areas in software
though the processing power, capacity technologies include executive
and sophistication of them continue to information systems, artificial intelligence,
increase. The commoditization of expert systems, improved user interfaces
computer hardware has forced many and computer-aided software engineering
players that previously experienced high tools. All these areas offer operators and
profit margins as PC manufacturers to their clients the benefits of substantial
move into higher value-added service increases in business productivity. A
segments, bringing these companies into reduction in cost and the potential for
the IT Consulting industry via integrated increased profitability can occur in
systems. Innovations in the fields of product development or in manufacturing,
computer systems and applications warehousing and distribution. While
design, development, and integration improvements in the ease with which
(the two largest product segments in this nonexperts can use new technologies will
industry) have been a hotbed of reduce demand for technical support, in
innovation for firms looking to diversify general, technological advancements drive
beyond commoditized hardware. For clients to seek the design and
example, major player IBM announced implementation assistance of experts in
plans to completely divest its this industry.

Revenue Volatility The IT consulting industry is characterized Over the next five years, revenue
by a medium degree of volatility. The sheer volatility is expected to subside as
size of the industry itself, at over $375.0 continued growth in corporate profit and
Level
billion and containing more than 430,000 increasing reliance on IT results in
The level of companies, tends to alleviate large consistent industry growth. As profit
Volatility is M
edium fluctuations in revenue from year to year. rises, IBISWorld expects companies to
Over the five years to 2017, revenue has continue to use new technologies and
decreased as much as 1.0% in 2015 and integrate new systems with existing
grown as much as 4.6% in 2016. practices to improve efficiency.
A higher level of revenue Volatility vs Growth

volatility implies greater
industry risk. Volatility can 1000 Hazardous Rollercoaster
negatively affect long-term Revenue volatility* (%)
strategic decisions, such as 100
the time frame for capital
investment.
10
When a firm makes poor
investment decisions it IT Consulting
may face underutilized 1
capacity if demand
suddenly falls, or capacity 0.1 Stagnant Blue Chip
constraints if it rises –30 –10 10 30 50 70
quickly. Five-year annualized revenue growth (%)
* Axis is in logarithmic scale
Regulation & Policy Although the IT Consulting industry is flame retardants. Due to the improper
not strictly regulated, many cross- disposal of electronic waste poses risks to
industry laws and regulations have a workers and communities located near
Level & Trend significant impact on the results of landfills and incinerators, the US
he level of
T operations, most notably in the areas of Environmental Protection Agency regulates
Regulation is L ight environmental, intellectual property, and the handling of these materials. Industry
and the trend healthcare laws. operators contend with sanctions and costs
Environmental laws at the federal, if they are found to be in violation of
is I ncreasing state, and local levels regulate pollutant environmental laws.
discharge, hazardous waste management Intellectual property regulations are
and disposal, product content and crucial to the profitability of operators in
product recycling. Although the IT Consulting industry. Companies rely
manufacturers are primarily responsible on patent, copyright, trademark and trade
for the content and environmentally safe secret laws in the United States. These laws
production of the hardware used by this permit companies to establish and
industry, IT consultants must inevitably maintain intellectual property rights to the
handle and dispose of electronic products and they create. The breadth of
equipment. Electronic devices may information and the freedom with which it
contain known contaminants including moves, however, makes any regulatory
lead, cadmium, beryllium and brominated directive highly challenging to enforce.

Industry Assistance The industry receives no form of direct companies developing applications,
government assistance. However, the services, infrastructure and tools.
Software and Information Industry Company activities focus on several
Level & Trend Association (SIIA) works to provide topics annually and now include Software
he level of
T government relations, business as a Service (SaaS), open source software
Industry Assistance development, corporate education and development and mobile applications. In
is L owand the intellectual property protection to addition, the industry is served by dozens
companies that produce and deliver of IT publications, trade associations and
trend is S teady
software and content products and market research firms that focus
services. The SIIA consists of seven specifically on the IT industry. Major
divisions: business information, public trade organizations include Computing
policy, anti-piracy, software, content, Technology Industry Association
education and financial information (CompTIA), Information Technology
services. The software division has four Industry Council and the Association of
active groups and provides a forum for Information Technology Professionals.

Key Statistics
Industry Data Industry Corporate
Revenue Value Added Establish- Wages Domestic Profit
($m) ($m) ments Enterprises Employment Exports Imports ($m) Demand ($b)
2008 319,596.5 150,036.6 416,244 403,687 1,622,384 -- -- 129,481.4 N/A 1,285.1
2009 309,665.3 150,356.8 419,942 404,574 1,651,743 -- -- 129,393.2 N/A 1,397.0
2010 332,590.9 167,533.8 427,484 408,856 1,728,987 -- -- 141,498.3 N/A 1,746.4
2011 351,585.8 173,943.8 429,778 412,099 1,748,805 -- -- 143,910.0 N/A 1,816.6
2012 367,144.9 172,917.0 435,704 418,629 1,769,447 -- -- 144,288.8 N/A 1,998.2
2013 366,751.6 190,179.9 438,534 420,728 1,892,489 -- -- 159,457.1 N/A 2,032.9
2014 378,795.7 195,365.8 443,584 424,646 1,954,275 -- -- 167,117.0 N/A 2,152.1
2015 375,039.8 203,937.2 443,409 304,634 1,951,635 -- -- 176,077.1 N/A 2,088.1
2016 392,149.8 214,409.6 457,980 314,259 2,032,151 -- -- 184,298.5 N/A 2,085.8
2017 408,198.2 223,494.4 464,103 317,837 2,097,704 -- -- 191,316.6 N/A 2,164.0
2018 424,327.0 232,880.9 478,018 327,031 2,175,309 -- -- 199,246.6 N/A 2,226.7
2019 433,078.4 238,712.0 484,365 331,154 2,221,443 -- -- 203,859.8 N/A 2,223.9
2020 444,628.1 246,371.7 495,666 338,662 2,281,163 -- -- 209,875.2 N/A 2,259.0
2021 456,886.2 253,657.4 503,414 343,642 2,337,526 -- -- 215,759.6 N/A 2,300.3
2022 471,278.3 263,203.6 517,072 352,714 2,409,689 -- -- 223,127.2 N/A 2,357.1
Sector Rank 2/85 1/85 4/85 4/85 1/85 N/A N/A 1/85 N/A N/A
Economy Rank 24/1807 11/1577 23/1807 22/1807 14/1807 N/A N/A 8/1807 N/A N/A
Annual Change Industry Establish- Domestic Corporate

Revenue Value Added ments Enterprises Employment Exports Imports Wages Demand Profit
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
2009 -3.1 0.2 0.9 0.2 1.8 N/A N/A -0.1 N/A 8.7
2010 7.4 11.4 1.8 1.1 4.7 N/A N/A 9.4 N/A 25.0
2011 5.7 3.8 0.5 0.8 1.1 N/A N/A 1.7 N/A 4.0
2012 4.4 -0.6 1.4 1.6 1.2 N/A N/A 0.3 N/A 10.0
2013 -0.1 10.0 0.6 0.5 7.0 N/A N/A 10.5 N/A 1.7
2014 3.3 2.7 1.2 0.9 3.3 N/A N/A 4.8 N/A 5.9
2015 -1.0 4.4 0.0 -28.3 -0.1 N/A N/A 5.4 N/A -3.0
2016 4.6 5.1 3.3 3.2 4.1 N/A N/A 4.7 N/A -0.1
2017 4.1 4.2 1.3 1.1 3.2 N/A N/A 3.8 N/A 3.7
2018 4.0 4.2 3.0 2.9 3.7 N/A N/A 4.1 N/A 2.9
2019 2.1 2.5 1.3 1.3 2.1 N/A N/A 2.3 N/A -0.1
2020 2.7 3.2 2.3 2.3 2.7 N/A N/A 3.0 N/A 1.6
2021 2.8 3.0 1.6 1.5 2.5 N/A N/A 2.8 N/A 1.8
2022 3.2 3.8 2.7 2.6 3.1 N/A N/A 3.4 N/A 2.5
Sector Rank 44/85 41/85 61/85 60/85 48/85 N/A N/A 46/85 N/A N/A
Economy Rank 772/1807 557/1577 830/1807 804/1807 604/1807 N/A N/A 653/1807 N/A N/A
Key Ratios Imports/ Exports/ Revenue per Share of the

IVA/Revenue Demand Revenue Employee Wages/Revenue Employees Average Wage Economy
(%) (%) (%) ($’000) (%) per Est. ($) (%)
2008 46.95 N/A N/A 196.99 40.51 3.90 79,809.34 1.01
2009 48.55 N/A N/A 187.48 41.78 3.93 78,337.37 1.04
2010 50.37 N/A N/A 192.36 42.54 4.04 81,838.85 1.13
2011 49.47 N/A N/A 201.04 40.93 4.07 82,290.48 1.16
2012 47.10 N/A N/A 207.49 39.30 4.06 81,544.57 1.13
2013 51.86 N/A N/A 193.79 43.48 4.32 84,257.87 1.22
2014 51.58 N/A N/A 193.83 44.12 4.41 85,513.55 1.22
2015 54.38 N/A N/A 192.17 46.95 4.40 90,220.30 1.24
2016 54.68 N/A N/A 192.97 47.00 4.44 90,691.34 1.29
2017 54.75 N/A N/A 194.59 46.87 4.52 91,202.86 1.31
2018 54.88 N/A N/A 195.07 46.96 4.55 91,594.62 1.33
2019 55.12 N/A N/A 194.95 47.07 4.59 91,769.09 1.34
2020 55.41 N/A N/A 194.91 47.20 4.60 92,003.60 1.36
2021 55.52 N/A N/A 195.46 47.22 4.64 92,302.55 1.37
2022 55.85 N/A N/A 195.58 47.35 4.66 92,595.85 1.40
Sector Rank 42/85 N/A N/A 36/85 22/85 41/85 20/85 1/85
Economy Rank 251/1577 N/A N/A 1148/1807 126/1807 1350/1807 265/1807 11/1577
Figures are in inflation-adjusted 2017 dollars. Rank refers to 2017 data. SOURCE: WWW.IBISWORLD.COM

Industry Financial Ratios

Apr 2015 - Mar 2016 by company revenue
Apr 2012 - Apr 2013 - Apr 2014 - Apr 2015 - Small Medium Large
Mar 2013 Mar 2014 Mar 2015 Mar 2016 (<$10m) ($10-50m) (>$50m)
Liquidity Ratios
Current Ratio 1.5 1.5 1.5 1.5 1.6 1.6 1.3
Quick Ratio 1.3 1.3 1.3 1.3 1.4 1.4 1.1
Sales / Receivables (Trade Receivables
Turnover) 7.3 7.6 7.4 7.6 9.4 7.0 6.6
Days’ Receivables 50.0 48.0 49.3 48.0 38.8 52.1 55.3
Cost of Sales / Inventory (Inventory Turnover) n/c n/c n/c n/c n/c n/c n/c
Days’ Inventory n/a n/a n/a n/a n/a n/a n/a
Cost of Sales / Payables (Payables Turnover) 13.3 13.9 13.8 14.7 20.7 13.6 11.2
Days’ Payables 27.4 26.3 26.4 24.8 17.6 26.8 32.6
Sales / Working Capital 13.7 14.7 15.6 15.8 16.0 13.0 21.3
Coverage Ratios
Earnings Before Interest & Taxes (EBIT) /
Interest 10.9 11.5 11.3 12.6 10.2 17.6 11.0
Net Profit + Dep., Depletion, Amort. / Current
Maturities LT Debt 4.0 3.1 3.2 4.5 3.4 4.1 6.3
Leverage Ratios
Fixed Assets / Net Worth 0.2 0.2 0.2 0.2 0.2 0.2 0.3
Debt / Net Worth 2.1 2.2 2.3 2.2 1.8 2.0 4.4
Tangible Net Worth 22.7 20.1 20.7 18.6 18.5 23.0 10.5
Operating Ratios
Profit before Taxes / Net Worth, % 40.0 40.6 42.7 45.4 45.3 45.8 45.1
Profit before Taxes / Total Assets, % 12.0 12.1 12.4 13.0 15.0 14.0 9.1
Sales / Net Fixed Assets 57.4 59.5 67.6 72.1 68.9 77.1 71.9
Sales / Total Assets (Asset Turnover) 3.1 3.2 3.2 3.4 3.7 3.4 2.7
Cash Flow & Debt Service Ratios (% of sales)

Cash from Trading 40.9 41.6 40.8 39.6 52.2 34.3 26.0
Cash after Operations 4.9 5.1 4.9 4.8 4.8 4.7 4.8
Net Cash after Operations 4.9 5.0 4.6 4.4 4.6 4.2 4.1
Cash after Debt Amortization 1.4 1.2 1.1 0.9 0.6 1.2 0.6
Debt Service P&I Coverage 4.1 4.0 4.3 4.2 3.5 7.1 2.3
Interest Coverage (Operating Cash) 9.2 10.0 10.6 10.1 7.2 18.6 7.5
Assets, %
Cash & Equivalents 20.8 21.0 21.2 20.7 24.2 20.7 14.0
Trade Receivables (net) 41.8 41.2 41.9 42.9 37.5 47.5 44.4
Inventory 4.5 3.7 3.4 3.2 3.6 2.4 4.0
All Other Current Assets 4.7 4.7 4.8 5.0 4.1 5.2 6.5
Total Current Assets 71.8 70.7 71.3 71.8 69.4 75.8 68.8
Fixed Assets (net) 11.2 10.8 10.7 10.3 13.6 8.5 7.3
Intangibles (net) 9.3 10.1 9.0 9.8 7.4 8.4 17.0
All Other Non-Current Assets 7.8 8.3 9.0 8.1 9.6 7.3 6.9
Total Assets 100.0 100.0 100.0 100.0 100.0 100.0 100.0
Total Assets ($m) 34,416.4 35,180.0 37,950.0 37,084.1 1,400.6 8,133.7 27,549.8
Liabilities, %
Notes Payable-Short Term 10.5 11.4 10.8 10.8 15.3 8.4 6.7
Current Maturities L/T/D 2.7 2.5 2.2 2.3 2.9 1.8 2.0
Trade Payables 16.5 15.9 17.3 17.4 13.5 18.8 22.6
Income Taxes Payable 0.3 0.4 0.3 0.4 0.2 0.6 0.5
All Other Current Liabilities 20.0 20.2 20.6 20.8 19.6 21.8 20.9
Total Current Liabilities 50.1 50.4 51.2 51.7 51.5 51.3 52.7
Long Term Debt 9.9 10.7 10.6 10.7 12.7 7.7 12.9
Deferred Taxes 0.4 0.3 0.3 0.3 0.1 0.3 0.5
All Other Non-Current Liabilities 7.6 8.3 8.2 8.9 9.8 9.3 6.4
Net Worth 32.0 30.2 29.7 28.4 25.9 31.4 27.5
Total Liabilities & Net Worth ($m) 34,416.4 35,180.0 37,950.0 37,084.1 1,400.6 8,133.7 27,549.8
Maximum Number of Statements Used 1,888 1,871 2,065 2,066 824 818 424
Source: RMA Annual Statement Studies, rmahq.org. RMA data for all industries is derived directly from more
than 260,000 statements of member financial institutions’ borrowers and prospects.
Note: For a full description of the ratios refer to the Key Statistics chapter online.

Jargon & Glossary
Industry Jargon BIG DATA ANALYTICSThe method by which a OUTSOURCETo procure goods or services under
company combs through a large collection of contract with an outside supplier.
unorganized data for potential trends and insights. SERVERAny combination of hardware or software
CLOUD COMPUTINGComputing model in which designed to provide services to clients; it generally refers
companies’ computer applications are hosted in outside to a center of a network, where information can be
servers accessible via the internet and managed by shared via an online connection.
third-party firms. SOFTWARE AS A SERVICE (SAAS)Software that is
COMMODITIZATIONThe trend toward uniformity in deployed over the internet and runs behind a firewall in
product offerings and price; commonly cited as a cause a person’s local area network or personal computer.
of declining prices and profitability in computer THIRD PLATFORMA collection of all modern IT
hardware manufacturing. technologies introduced in the past decade; includes
INFORMATION TECHNOLOGY (IT)The design, cloud computing, social networking, mobile computing
development, implementation, support or management and ‘big data’ analytics.
of computer-based information systems. VIRTUALIZATIONThe use of software programs to
INTEGRATED SYSTEMA preintegrated, optimized operate multiple virtual server systems on one physical
combination of software and hardware. Such a system server.
increases ease in installing updates and improves
performance, scalability and reliability.
IBISWorld Glossary BARRIERS TO ENTRYHigh barriers to entry mean that ESTABLISHMENTThe smallest type of accounting unit
new companies struggle to enter an industry, while low within an enterprise, an establishment is a single
barriers mean it is easy for new companies to enter an physical location where business is conducted or where
industry. services or industrial operations are performed. Multiple
CAPITAL INTENSITYCompares the amount of money establishments under common control make up an
spent on capital (plant, machinery and equipment) with enterprise.
that spent on labor. IBISWorld uses the ratio of EXPORTSTotal value of industry goods and services sold
depreciation to wages as a proxy for capital intensity. by US companies to customers abroad.
High capital intensity is more than $0.333 of capital to IMPORTSTotal value of industry goods and services
$1 of labor; medium is $0.125 to $0.333 of capital to $1 brought in from foreign countries to be sold in the
of labor; low is less than $0.125 of capital for every $1 of United States.
labor.
INDUSTRY CONCENTRATIONAn indicator of the
CONSTANT PRICESThe dollar figures in the Key dominance of the top four players in an industry.
Statistics table, including forecasts, are adjusted for Concentration is considered high if the top players
inflation using the current year (i.e. year published) as account for more than 70% of industry revenue.
the base year. This removes the impact of changes in Medium is 40% to 70% of industry revenue. Low is less
the purchasing power of the dollar, leaving only the than 40%.
“real” growth or decline in industry metrics. The inflation
INDUSTRY REVENUEThe total sales of industry goods
adjustments in IBISWorld’s reports are made using the
and services (exclusive of excise and sales tax); subsidies
US Bureau of Economic Analysis’ implicit GDP price
on production; all other operating income from outside
deflator.
the firm (such as commission income, repair and service
DOMESTIC DEMANDSpending on industry goods and income, and rent, leasing and hiring income); and
services within the United States, regardless of their capital work done by rental or lease. Receipts from
country of origin. It is derived by adding imports to interest royalties, dividends and the sale of fixed
industry revenue, and then subtracting exports. tangible assets are excluded.
EMPLOYMENTThe number of permanent, part-time, INDUSTRY VALUE ADDED (IVA)The market value of
temporary and seasonal employees, working proprietors, goods and services produced by the industry minus the
partners, managers and executives within the industry. cost of goods and services used in production. IVA is
ENTERPRISEA division that is separately managed and also described as the industry’s contribution to GDP, or
keeps management accounts. Each enterprise consists profit plus wages and depreciation.
of one or more establishments that are under common
ownership or control.

Jargon & Glossary
IBISWorld Glossary INTERNATIONAL TRADEThe level of international

trade is determined by ratios of exports to revenue and
PROFITIBISWorld uses earnings before interest and tax
(EBIT) as an indicator of a company’s profitability. It is
imports to domestic demand. For exports/revenue: low is calculated as revenue minus expenses, excluding interest
less than 5%, medium is 5% to 20%, and high is more and tax.
than 20%. Imports/domestic demand: low is less than VOLATILITYThe level of volatility is determined by
5%, medium is 5% to 35%, and high is more than 35%. averaging the absolute change in revenue in each of the
LIFE CYCLEAll industries go through periods of growth, past five years. Volatility levels: very high is more than
maturity and decline. IBISWorld determines an ±20%; high volatility is ±10% to ±20%; moderate
industry’s life cycle by considering its growth rate volatility is ±3% to ±10%; and low volatility is less than
(measured by IVA) compared with GDP; the growth rate ±3%.
of the number of establishments; the amount of change WAGESThe gross total wages and salaries of all
the industry’s products are undergoing; the rate of employees in the industry. The cost of benefits is also
technological change; and the level of customer included in this figure.
acceptance of industry products and services.
NONEMPLOYING ESTABLISHMENTBusinesses with no
paid employment or payroll, also known as
nonemployers. These are mostly set up by self-employed
individuals.

www.ibisworld.com | 1-800-330-3772 | info @ibisworld.com
At IBISWorld we know that industry intelligence

is more than assembling facts
It is combining data with analysis to answer the
questions that successful businesses ask
Identify high growth, emerging & shrinking markets
Arm yourself with the latest industry intelligence
Assess competitive threats from existing & new entrants
Benchmark your performance against the competition
Make speedy market-ready, profit-maximizing decisions
Who is IBISWorld?
We are strategists, analysts, researchers, and marketers. We provide
answers to information-hungry, time-poor businesses. Our goal is to
provide real world answers that matter to your business in our 700 US
industry reports. When tough strategic, budget, sales and marketing
decisions need to be made, our suite of Industry and Risk intelligence
products give you deeply-researched answers quickly.
IBISWorld Membership
IBISWorld offers tailored membership packages to meet your needs.
Disclaimer
This product has been supplied by IBISWorld Inc. (‘IBISWorld’) solely for use of, or reliance upon, the data or information contained herein. Copyright in
by its authorized licenses strictly in accordance with their license agreements this publication is owned by IBISWorld Inc. The publication is sold on the
with IBISWorld. IBISWorld makes no representation to any other person basis that the purchaser agrees not to copy the material contained within it
with regard to the completeness or accuracy of the data or information for other than the purchasers own purposes. In the event that the purchaser
contained herein, and it accepts no responsibility and disclaims all liability uses or quotes from the material in this publication – in papers, reports, or
(save for liability which cannot be lawfully disclaimed) for loss or damage opinions prepared for any other person – it is agreed that it will be sourced
whatsoever suffered or incurred by any other person resulting from the use to: IBISWorld Inc.
Copyright 2017 IBISWorld Inc

IT Consulting in The US - IBIS

Uploaded by

Copyright:

Available Formats

IT Consulting in The US - IBIS

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

IT Consulting in The US - IBIS

Uploaded by

Copyright:

Available Formats

What are the main activities of the IT consulting industry?

What are the main activities of the IT consulting industry?

What industries are similar to the IT consulting industry?

What industries are similar to the IT consulting industry?

WWW.IBISWORLD.

COM IT Consulting in the USAugust 2017 1

All systems go: Rising corporate profit will lead

IBISWorld Industry Report 54151

2 About this Industry 18 International Trade 34 Key Statistics

www.ibisworld.com | 1-800-330-3772 | info @ibisworld.com

About this Industry

Industry Definition The IT Consulting industry includes communication infrastructure; and

Main Activities The primary activities of this industry are

The major products and services in this industry are

Similar Industries 42343 Computer & Packaged Software Wholesaling in the US

44312 Computer Stores in the US

51121 Software Publishing in the US

51821 Data Processing & Hosting Services in the US

Provided to: University of Nevada, Reno (2126926196) | 01 September 2017

About this Industry

Additional Resources For additional information on this industry

IBISWorld writes over 1000 US

Provided to: University of Nevada, Reno (2126926196) | 01 September 2017

Key Statistics Revenue Annual Growth 12-17 Annual Growth 17-22

$29.8bn $191.3bn 317,837

Key External Drivers 10.0%

Industry Structure Life Cycle Stage Growth Regulation Level Light

Provided to: University of Nevada, Reno (2126926196) | 01 September 2017

Provided to: University of Nevada, Reno (2126926196) | 01 September 2017

Private investment in computers and Corporate profit

Provided to: University of Nevada, Reno (2126926196) | 01 September 2017

Current In a technology-driven environment,

infrastructures used by other industry

Provided to: University of Nevada, Reno (2126926196) | 01 September 2017

Continued innovation The trend toward cloud computing, a

Provided to: University of Nevada, Reno (2126926196) | 01 September 2017

Industry The IT Consulting industry is forecast to

Business confidence Over the next five years, corporate profit

Provided to: University of Nevada, Reno (2126926196) | 01 September 2017

Industry structure Due to strong revenue growth and

Provided to: University of Nevada, Reno (2126926196) | 01 September 2017

20 Maturity Quality Growth

Key Features of a Growth Industry

Computer & Packaged Software Wholesaling

Provided to: University of Nevada, Reno (2126926196) | 01 September 2017

Provided to: University of Nevada, Reno (2126926196) | 01 September 2017

Products & Markets

Supply Chain KEY BUYING INDUSTRIES

KEY SELLING INDUSTRIES

Provided to: University of Nevada, Reno (2126926196) | 01 September 2017

Products & Markets

Products & Services Products and services segmentation (2017)

10.7% Custom services

Total $408.2bn SOURCE: WWW.IBISWORLD.COM

estimated 19.0% of revenue in 2017. develop on-premise data security systems

Provided to: University of Nevada, Reno (2126926196) | 01 September 2017

Products & Markets

Products & Services hardware capability and virtualization Technical consulting

Provided to: University of Nevada, Reno (2126926196) | 01 September 2017

COM IT Consulting in the USAugust 2017 1