United Kingdom IT Services Market - Growth, Trends,COVID-19 Impact, and Forecasts (2022-2027)

United Kingdom IT Services Market is Segmented by Type (IT Outsourcing, IT Consulting & Implementation, Business Process), and by End User ( IT and Telecommunication, Government, BFSI, Energy and Utilities, Consumer Goods and Retail )

Market Snapshot

United Kingdom IT Services Market
Study Period: 2020-2027
Base Year: 2021
CAGR: 10.36 %

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Market Overview

The United Kingdom IT services market is expected to register a CAGR of 10.36% during the forecast period. Expanded IT investment, with the adoption of software-as-a-service and increased cloud-based products, demonstrates the industry's requirements for IT services. Digital transformation and automation are trending in the region, fuelling the demand for IT services.

  • The increasing use of internet applications and services, as well as the growing availability of wireless devices such as smartphones, other smart gadgets, and associated apps, are driving the growth of the United Kingdom IT service market. Many regional companies have reaped significant benefits from digital services to expand customer choice while improving efficiency and competitiveness. Large platforms have evolved in the UK because of crucial structural features of today's digital economy with the help of digital services. For example, The SAP Process Automation solution for workflow management and robotic process automation is AI-powered, intuitive, and no-code (RPA). Users can simplify business process automation, improve process efficiency, and increase business agility using visual drag-and-drop tools and prebuilt, industry-specific content.
  • Many prominent SaaS companies have ventured into the UK, where the market is increasingly expanding. SaaS growth is fuelled by technology advancements in the region, such as adopting artificial intelligence and machine learning. The country's SaaS market is still maturing; investors have plenty of chances. For example, Paddle, a provider of payments infrastructure for SaaS firms in London, has acquired ProfitWell, a subscription analytics and retention automation software provider based in Boston, Massachusetts. Paddle's objective to remove barriers to growth for SaaS firms worldwide will be aided by the purchase, valued at over USD 200 million in cash and equity.
  • Government Cloud (G-Cloud) is a UK government effort to make cloud service procurement easier for government departments and promote government-wide cloud usage. G-Cloud consists of a set of framework agreements with cloud service providers and a listing of their services in the Digital Marketplace, an online store. These allow public-sector organizations to compare and acquire services without a comprehensive review. In addition, the European Union announced a temporary political agreement for new legislation known as the Digital Services Act (DSA), which would require major digital platforms to be more open in their algorithms and provide clearer pathways for removing abusive content and disinformation.
  • COVID-19 has had a huge impact on the UK IT service industry sector. Working techniques of the Companies have changed to remote working scenarios for which demand for cloud computing services has increased. Companies had to ship computers to employees' homes and equip them with Wi-Fi adapters, power backup sources, and broadband connections when the IT services business began allowing employees to work from home. The virtual private network bandwidth was increased, and backend capacity was increased to meet the increased number of concurrently connected remote users. Virtual working was made possible because of cloud-based remote access solutions. Thus, the market initially faced challenges during the pandemic, but gradually COVID-19 has had a good impact on IT services because of the increasing service needs.
  • Cloud providers are becoming a major target for malicious attacks as more businesses and processes shift to the cloud. DDoS (distributed denial of service) attacks are the most common attacks, and the most targeted platforms are (PaaS) and SaaS. The DDoS attack is designed to restrict legitimate user requests to website servers. It can leave a website unusable for days, leading to a drop in revenue and a loss of customer trust and brand authority. These security and data breaching risks limit the market's growth in the region because companies are getting more stringent in maintaining data privacy.

Scope of the Report

IT services allow organizations to access the technical tools and information they need to carry out their daily operations and duties. These services are frequently managed by teams with experience in IT or computer science for enterprises across a wide range of industries. Numerous IT services can assist firms and aid their smooth and efficient operation. Many of these services enable employees to interface with technology that helps them perform their daily tasks or communicate with coworkers.

United Kingdom IT Services Market is Segmented by Type (IT Outsourcing, IT Consulting & Implementation, Business Process) and by End User ( IT and Telecommunication, Government, BFSI, Energy and Utilities, Consumer Goods and Retail and other end-user industries)

By Type
IT Outsourcing
IT Consulting & Implementation
Business Process
BY End User
IT and Telecommunication
Government
BFSI
Energy & Utilities
Consumer Goods & Retail
Other End-User

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Key Market Trends

The growth in nearshoring IT outsourcing in the UK market is driving the IT service market growth in the region.

  • Domestic outsourcing is a technique in which the country's corporations prefer to outsource services to vendors within their own country. They favor nearshore providers outsourcing overseas because of proximity, language, cultural commonalities, and minor time differences. For example, Infinity Group, a UK-based company, is one of the industry's leading IT outsourcing organizations, providing outsourced IT support to over 1000 businesses across the UK. The company works with clients, from fast-growing start-ups and SMEs to well-established larger corporations, including well-known national chains.
  • The Bank of England estimates that 40-90 percent of bank workloads will be hosted on the public cloud or software-as-a-service in the coming 10 years. It's crucial to examine the impact on business continuity if one of those suppliers fails, and financial authorities in the UK and around the world, notably the Bank of England, the Financial Conduct Authority (FCA), and the Prudential Regulation Authority (PRA), are keeping a close eye on this. This will create a growth opportunity for the UK IT service market.
  • Some technology trends for nearshore IT services include 5G Technology, IT Automation, Container Technology, Serverless computing, and virtual desktop infrastructure. In the coming years, 5G will be critical to the growth of our digital economy and society. 5G has the potential to impact practically every area of the UK residents' lives, from personalized medicine to precision agriculture and smart energy grids to connected mobility. At the same time, 5G networks provide more possible entry points for attackers due to their less centralized architecture, smart computer power at the edge, the requirement for more antennae, and more reliance on software. This is the reason the IT service market is growing in the region because all the IT giants are into nearshoring IT services.
  • Corporates of the country are prioritizing domestic outsourcing of 5G services because it is critical to ensure the security of the EU's future 5G networks. For example, The Baltic telecommunications and media group and Ericsson have signed a framework agreement to introduce 5G technology in the UK market. The agreement will provide 5G network coverage in the most densely populated cities and districts, with plans to expand customer services in media entertainment and gaming, cloud, data centers, and the Internet of Things.
  • The Government has planned to promote in-house IT service providers to encourage nearshoring IT outsourcing. The Government has launched its new digital strategy to boost the economy and generate more high-skilled, high-wage employment in the country. For example, according to the UK government department of digital, Culture, Media & Sports, in 2022, UK digital start-ups and scale-ups have secured more than EUR12 billion in venture capital funding. In terms of capital secured by tech start-up enterprises in the year, the UK is slightly behind the US and ahead of China.
United Kingdom IT Services Market

Digitalization in the BFSI sector is driving the growth of the UK IT service market.

  • With a major talent pool and high service quality, the United Kingdom is one of the most appealing IT outsourcing destinations. Fintech investment in the UK is remarkable. These companies have the requisite domain expertise and experience in designing fintech solutions for digital banking, money transfers, personal financial management, risk and compliance management, peer-to-peer lending, and various other applications. For example, SurePay, a European platform that provides online banking account verification services, has teamed up with Virgin Money in the United Kingdom to launch its UK Confirmation of Payee solution.
  • Banking-as-a-Service (BaaS) is a crucial component of open banking. It involves banks opening their systems and allowing third parties to access their data in real-time to improve their services. BaaS businesses are disrupting retail banking business models, altering incumbents' client relationships, and making it easier for fintech to enter the market.
  • With regulatory initiatives echoing worldwide, the UK is leading the open banking trend and indirectly driving the UK IT Service market. For example, 11: FS Foundry, a UK-based SaaS/PaaS business, is working on a platform to provide fundamental banking features using technology that eliminates the need to choose between agility and scalability. By reducing cost, time to market, and the hurdles of outmoded infrastructure, the firm hopes to make basic banking improvements and overhauls – traditionally considered as high risk, high expense, and, frankly, to be avoided – far more appealing and scalable for clients.
  • In addition, Bankable is a London-based firm aiming to make it easier for traditional financial institutions and other businesses to launch innovative payment options. A virtual ledger manager, digital banking, payment card programs, and e-wallets are among the company's BaaS offerings. Its end-to-end payment services are accessible through a unique interoperable platform that is PCI-DSS (Payment Card Industry – Data Security Standards) certified and hosted in Tier-4 data centers for increased security. Bankable assists its partners in overcoming the technological and regulatory obstacles that arise while creating innovative financial services. This is driving the IT service market in the UK.
  • Big global MNCs are acquiring UK-based fintech companies by which the IT service provider market for banking in the UK is increasing. For example, Apple has purchased a fintech firm based in London. Credit Kudos is a software start-up that helps businesses improve their affordability and risk assessments by utilizing open banking. Lenders can also use the software to expedite underwriting, increase decision-making accuracy, and improve customer service.
United Kingdom IT Services Market

Competitive Landscape

The UK IT service market is extremely competitive, with only a few significant competitors. Some of the key players hold the major share in the market. Moreover, the variables are involved in various mergers and acquisitions and product innovation, among others, to gain a competitive edge over others.

  • June 2022: Homerton Healthcare in the United Kingdom has chosen Sectra's business imaging as a cloud service to ensure patients have access to the most up-to-date technology. All the content and tools needed to organize, prioritize, and streamline imaging operations will be available in one application for the healthcare professional. Reading and reporting will be possible immediately within the Sectra solution, allowing for faster and more efficient diagnosis by removing the need for numerous programs.
  • June 2022: The UK's Central Data and Digital Office (CDDO) has released the Transforming for a Digital Future strategy, laying out a 2025 cross-government roadmap and vision. The plan highlights six primary purposes to improve and simplify citizen experiences, increase taxpayer value, and increase government efficiency and security.
  • Jan 2022: Atos, an IT services company, has filed a legal challenge against the Met Office and the Department for Business, Energy, and Industrial Strategy (BEIS) in the United Kingdom for over-allocating a significant IT contract to Microsoft last year.

Recent Development

  • June 2022: Mast Technologies, a London-based fintech, has raised Pound 1.2 million for its digital platform, which will help lenders and borrowers in the mortgage space. Borrowers have traditionally had to wait up to 60 days for the results of their mortgage applications. Mast claims to solve the problems of the traditional mortgage system by streamlining the process in which lenders can review applications.
  • June 22: Accenture, an MNC based out of the UK, has the acquisition of ARZ in Austria will help the global IT consulting firm grow its banking platform-as-a-service capabilities across Europe. ARZ operates a technology competence center for innovation and technology services in the banking sector in Austria, with offices in Vienna and Innsbruck.

Table of Contents

  1. 1. INTRODUCTION

    1. 1.1 Study Deliverables

    2. 1.2 Study Assumptions

    3. 1.3 Scope of the Study

  2. 2. RESEARCH METHODOLOGY

  3. 3. EXECUTIVE SUMMARY

  4. 4. MARKET DYNAMICS

    1. 4.1 Market Overview

    2. 4.2 Market Drivers

      1. 4.2.1 Digital Transformation in UK

      2. 4.2.2 The growth in nearshoring IT outsourcing in the UK

    3. 4.3 Market Restraints

      1. 4.3.1 Data security and breaching risks

    4. 4.4 Value Chain / Supply Chain Analysis

    5. 4.5 Porters 5 Force Analysis

      1. 4.5.1 Threat of New Entrants

      2. 4.5.2 Bargaining Power of Buyers/Consumers

      3. 4.5.3 Bargaining Power of Suppliers

      4. 4.5.4 Threat of Substitute Products

      5. 4.5.5 Intensity of Competitive Rivalry

    6. 4.6 COVID-19 Impact on the Market

  5. 5. MARKET SEGMENTATION

    1. 5.1 By Type

      1. 5.1.1 IT Outsourcing

      2. 5.1.2 IT Consulting & Implementation

      3. 5.1.3 Business Process

    2. 5.2 BY End User

      1. 5.2.1 IT and Telecommunication

      2. 5.2.2 Government

      3. 5.2.3 BFSI

      4. 5.2.4 Energy & Utilities

      5. 5.2.5 Consumer Goods & Retail

      6. 5.2.6 Other End-User

  6. 6. COMPETITIVE LANDSCAPE

    1. 6.1 Company Profiles

      1. 6.1.1 Atos Consulting

      2. 6.1.2 Accenture PLC

      3. 6.1.3 BearingPoint

      4. 6.1.4 Infosys

      5. 6.1.5 Wipro

      6. 6.1.6 TCS

      7. 6.1.7 Capgemini

      8. 6.1.8 IBM Corporation

      9. 6.1.9 HCL

    2. *List Not Exhaustive
  7. 7. Investment Analysis

  8. 8. Future of the Market

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Frequently Asked Questions

The United Kingdom IT Services Market market is studied from 2020 - 2027.

The United Kingdom IT Services Market is growing at a CAGR of 10.36% over the next 5 years.

Atos, Accenture plc, BearingPoint, Infosys Limited, Wipro Limited are the major companies operating in United Kingdom IT Services Market.

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