IT market development in 2015 and 2016
The overall IT services market grew by around 2% in the Nordic countries in 2015. The decline in traditional services coupled with the continued challenging macroeconomic environment in Finland will continue to affect overall market growth. IT market development is anticipated to be somewhat slower in Finland due to weak GDP growth while the Swedish market is expected to be active. In 2016, the market relevant for Tieto is estimated to grow by around 2%.
- In the financial services sector, the market is driven by customer experience, service digitalization, process automation and regulation both in the banking and insurance segments. The market for core system modernization is starting to pick up in both segments and customers are initiating transformation programmes with embedded global standard solutions. Interest in business process outsourcing is growing in connection with core business modernization and back-office automation. In Sweden, the market for business and technology consulting is at a good level. The renewal of the pension system in Finland is expected to generate demand in the pension segment during 2016.
- In the manufacturing and forest sector, uncertainty has somewhat increased in Finland while the ERP market has remained active all across the Nordic countries. Enterprises increasingly seek to enhance their business through new services enabled by industrial internet solutions while cost savings and automation in the demand supply chain are important drivers for initiating new IT projects.
- In the retail and logistics sector, enterprises are investing in more advanced solutions in order to achieve better consumer understanding, customer engagement and loyalty. Through digitalization, retailers can provide a unified customer experience in all interaction across different touchpoints. Demand for renewing eCommerce capabilities has remained good, and lately interest in digitalizing stores and store workers has been on the rise. This creates a need for visionary consultancy and implementation capabilities to look across the channels and underlying processes.
- In the public sector, the digitalization of services and processes will continue with a focus on cost reductions and citizen-centric services. In Sweden, the outsourcing trend continues to be strong and there is robust demand for Tieto’s cloud services. In Finland, there is good demand for shared infrastructure services based on the frame agreement concluded in 2014. The market for document and case management solutions is also healthy.
- In the healthcare and welfare sector, the key growth driver is the digitalization of services and processes. There is healthy demand for solutions such as mobile services for elderly people and eServices for welfare. In Finland, the market is somewhat affected by the weak financial situation while the reform in the healthcare and welfare sector will provide promising opportunities for Tieto.
- In the energy utility sector, the market for advanced metering infrastructure in energy distribution is growing, especially in Norway. In the oil & gas market, investment levels have remained low and customers are requesting price reductions in continuous services as well.
- In the media sector, customers are driving business transformation reflecting the increased deployment of digital services. Due to clients’ tight budgets, investment decisions are driven by cost reductions. This is expected to result in new outsourcing opportunities in the mid-term.
- In the telecom sector, IT transformation programmes are driven by the need to simplify legacy systems and cut costs as well as by the potential to create additional business value. Telecom operators are moving from customized solutions to sourcing of standardized packaged solutions. IT service providers are experiencing aggressive competition in this sector.