Steady growth, big changes in Slovenian IT services

Showing signs of maturity, the Slovenian IT services market is expected to surpass $290 mln in 2007, a jump of just over 10% from 2006. The increasingly technology-dependent economy will fuel IT services uptake at the same time privatization forces organizations to modernize both their IT infrastructure and business processes. Coupled with the ongoing impact of EU accession on IT  development, the market should stay steady, expanding at a healthy annual average of around 10% through 2011.

Despite the maturity of the Slovenian IT environment, the IT services market remains largely focused on basic support services. By the end of 2007, IDC estimates that HW and SW support will together account for more than 28% of IT services spending. Along these lines, systems integration is the sweet spot for many IT services providers and will represent over 23% of spending for the year. By contrast, the market for IT outsourcing has remained relatively small, at a little less than 12%, although it is the fastest-growing area. The mature nature of the Slovenian IT services market is most evident in the competition for market share. Although there were more than 50 providers competing for market share in 2006, the top 3 vendors (HERMES Softlab, SRC.SI, and S&T Slovenija) retained their positions from the previous year.

Moreover, only two new vendors managed to break into the top 10. Given the limited client base in the country, IDC believes that a wave of consolidation will take place over the next few years, with many smaller players merging or being acquired by larger firms. In terms of demand, telecoms, banking, and discrete manufacturing invest the most in IT services in Slovenia. Together, these 3 sectors represented nearly a third of IT services spending in 2006 and will likely do so again in 2007.

The government also represents an important source of IT services revenue, with combined spending by local and central governments exceeding spending in any other single vertical.