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United States IT Services - Market Share Analysis, Industry Trends & Statistics, Growth Forecasts 2019 - 2029

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  • 200 Pages
  • February 2024
  • Region: United States
  • Mordor Intelligence
  • ID: 5854524
The United States IT Services Market size is estimated at USD 461.03 billion in 2024, and is expected to reach USD 630.76 billion by 2029, growing at a CAGR of 6.47% during the forecast period (2024-2029).

Key Highlights

  • Firms focusing more on digital with access to advanced technologies for driving growth while decreasing cost, growing usage of cloud technologies, and using business intelligence for forecasting and optimizing company operations to earn more increased revenues are a few of the critical IT Services Market drivers and trends fueling the growth of the market. Growing data security and privacy protection considerations drive the demand for IT services from companies across various industry verticals.
  • According to the US Office of Management and Budget, in 2022, the US federal government budget set aside around USD 58.44 million to fund the information technology needs of civilian federal agencies. The amount of money set aside for the Department of Defense or other secret IT expenses is separate from the budget estimates for 2022. The IT funds allotted to various government agencies typically shift along with leadership goals. From about USD 6.4 million in 2021 to USD 6.9 million in 2022, the Department of Health and Human Services IT budget increased. Such investments are boosting the IT sector in the country.
  • In addition, according to the Bureau of Labor Statistics, in 2022, the tech industry in the United States contributed nearly two trillion dollars to the nation's total gross domestic product (GDP), or about 8.8 % of GDP. Such contribution to the US economy would push the government to implement policies in favor of the IT sector; such regulations may drive businesses in the United States toward adopting IT services.
  • Further, IT decision-makers face regulatory compliance, security, and risk reduction issues as businesses in the digital transformation era upgrade their on-premises IT infrastructure services and move some of their operations to the cloud. The increasing realization among enterprises about the importance of saving money and resources by moving their data to the cloud instead of building and maintaining new data storage drives the demand for cloud-based solutions and, hence, the adoption of on-demand IT services in the region.
  • IT service market has a positive outlook in the country. Still, factors such as growing data breaches, cost concerns over product customization, and data migration are some of the reasons posing a threat to the market.
  • According to the US Census Bureau, post-COVID-19, from July to September 2022, retail e-commerce sales in the United States were almost USD 266 billion USD, a 3% rise over the previous quarter. Such a huge increase in ecommerce sales would create an opportunity for the market players to grow post-pandemic. In the wake of the pandemic, there is a notable uptick in organizations channeling substantial investments into the IT Services market. This surge is primarily driven by the imperative to address evolving digital transformation requirements across diverse end-user industries and to bolster the hybrid workplace environment.

USA IT Service Market Trends

IT Outsourcing to Hold Major Market Share

  • The majority of US companies have long outsourced IT work to developing economies to save on labor costs. The country houses major IT outsourcing players such as IBM, DXC, and Cognizant, which fuels the country's offshore and onshore IT outsourcing market during the forecast period.
  • The country has been registering significant digital transformations across all private and government-owned businesses, creating an opportunity for market vendors, such as TCS, Infosys, etc., to expand their businesses by contracting with the enterprises for their IT outsourcing service offerings. For instance, in December 2022, The State of Connecticut contracted with Infosys for USD 20 million to handle the technology maintenance and support for Health and Human Services in the state-owned Department of Social Services, showing the importance of IT outsourcing services in the country.
  • A US-based employer, for instance, considers a set of cost parameters while hiring a US-based employee. These costs include recruiting, office space, computer equipment, office furniture, supervision/training, quality assurance, wage/salary, Federal Insurance Contributions Act (FICA), Medicare, unemployment insurance, workman's comp, benefits, retirement plan, paid holidays, sick days, employee turnover, office supplies, human resources department, and government regulations compliance oversight.
  • Amongst these cost stacks, the IT outsourcing option becomes more viable. The global IT services vendors also Additionally, the global IT services vendors resorted to expanding their footprints in the country. Such action clearly indicates demand soaring for IT outsourcing from local companies. HCL Technologies announced the establishment of a Global Delivery Center in the country to offer digital transformation services to clients across smart manufacturing, insurance, aerospace, and defense industries.
  • Many midscale IT service companies operating in the US, such as Onix Networking Corp, Innowise Inc., etc., have been partnering with global technology companies, such as Microsoft and Google, to increase their IT outsourcing service capabilities, supporting the market growth in the country. For instance, in February 2023, Onix announced that it has collaborated in the Google Cloud Partner Advantage program to gain the application Development Partner Specialization. It expanded its IT outsourcing service, offering the capability and capacity to build customer solutions in the Application Development field using Google Cloud technology.
  • The digitization trend in the country with Industry 4.0 has led to the reshoring of IT services, i.e., bringing operations back to the US shores. This has become increasingly popular as the government has been aiming to create domestic jobs and help in the resurgence of the American economy, which can support the market expansion of IT outsourcing companies in the country and drive the market during the forecast period. According to the Bureau of Labor Statistics, employment growth in the United States will upsurge by 31% by 2026. Additionally, about 255,400 IT jobs are expected to be opened in this time frame. In the United States, about 0.36 million people were hired in the government industry and 0.083 million in the Information industry.

Healthcare to be the Largest End-user Industry

  • Advanced and emerging technologies have recently transformed healthcare in the United States. Hospitals and physician offices have implemented new technologies to respond to a changing regulatory environment and improve patient care quality. Medical facilities in the country now have high-tech operations that put advanced technologies with talented professionals.
  • IT services in the healthcare sector enable the implementation of insights-driven solutions for efficient and digitally accessible healthcare that suit individual organizations to small or big multiservice organizations and franchises. Additionally, these services help healthcare customers streamline integrated care delivery for better clinical, financial, and operational outcomes.
  • Moreover, the implementation of IT services in the healthcare sector is rapidly rising across the United States as healthcare organizations focus on digitizing healthcare practices for improved care. Therefore, various IT service providers are introducing healthcare IT services in the region.
  • For instance, Damco's HIPAA Complaint telemedicine solution helps healthcare providers deliver reliable and secure telehealth services that provide better alternatives to traditional healthcare models. The company's IT service makes medical services accessible remotely to patients by using the web and mobile devices to connect with doctors-leveraging video conferencing or audio/voice call communication, booking online appointments, getting real-time consultations, and more.
  • Furthermore, the growing data breaches in the healthcare sector across the country boost the requirement for IT implementation and consulting services in the Healthcare sector. For instance, according to the Identity Theft Resource Center data, in 2022, the healthcare industry remained the most targeted sector by cyber-attacks, resulting in data compromises. The number of data violations due to cyber-attacks in the healthcare industry in the United States increased from 306 cases in 2020 to 344 cases in 2022. A healthcare IT services provider can help healthcare organizations initiate best practices for network security, thus boosting the demand for IT services in the healthcare sector over the forecast period. Moreover, the advent of HIPAA-compliant IT services, PCI DSS, and other industry regulations has created constant opportunities for various IT services providers in the country to offer regulatory landscape-compliant services.
  • Furthermore, the government has forecasted the healthcare expenditure to reach USD 7.147 trillion, thereby contributing to the market growth. In the United States, digital transformation in healthcare involves the integration of digital functions or processes across the enterprise - be it a payer, a provider, or another organization. By combining digital systems and processes, digitally transformed healthcare can offer its patients individualized and omnichannel experiences. Advancements in electronic medical records or other initiatives striving for medical interoperability reflect the recent shift toward the digital transformation of healthcare in the United States. Such developments are boosting the adoption of IT services in the United States.

USA IT Service Industry Overview

The market under examination is currently dominated by major players, including IBM, TCS, Wipro, Microsoft, and Capgemini, all of whom boast substantial client bases. These industry leaders are continuously elevating their offerings, employing robust competitive strategies to maintain their market presence and retain their clientele. This intense competition characterizes the market landscape, with high levels of rivalry expected to persist throughout the forecasted period as these players tailor their services to meet the diverse needs of their customers.

In July 2023, Tata Consultancy Services (TCS) extended its longstanding partnership with GE HealthCare Technologies Inc. (GE HealthCare) to facilitate the transformation of GE Healthcare's IT operating model. This collaboration will primarily focus on digitally revamping GE HealthCare's global IT function by introducing a novel operating model for overseeing its application portfolio and fostering innovation. TCS will oversee the development, maintenance, rationalization, and standardization of its enterprise IT applications.

In October 2022, HCLTech and Google Cloud announced the expansion of their enduring collaboration, introducing new capabilities and service offerings aimed at expediting migrations to Google Cloud. This expanded partnership seeks to significantly enhance HCLTech's capacity to support digital transformations and provide crucial services, including migration support, legacy system modernization, and professional services for enterprise clients.

Additional Benefits:

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Table of Contents

1.1 Study Assumptions and Market Definition
1.2 Scope of the Study
4.1 Market Overview
4.2 Industry Attractiveness - Porter's Five Forces Analysis
4.2.1 Bargaining Power of Suppliers
4.2.2 Bargaining Power of Buyers
4.2.3 Threat of New Entrants
4.2.4 Degree of Competition
4.2.5 Threat of Substitutes
4.3 Industry Value Chain Analysis
4.4 Assessment of the Impact of COVID-19 on the market
4.5 Regulatory Landscape
5.1 Market Drivers
5.1.1 Acceleration of Digital Transformation Across Industries and Adoption of New Technologies
5.1.2 Growing Emphasis on Leveraging the Core Competencies by Outsourcing Non-core Operations
5.2 Market Restraints
5.2.1 Data Security, Customization, and Data Migration
5.3 Comparative Insights: Tier 1 (Large) vs Tier 2 (Medium) IT Services Vendors
5.4 In-housing and Outsourcing Analysis
6.1 By Type
6.1.1 IT Consulting and Implementation
6.1.2 IT Outsourcing
6.1.3 Business Process Outsourcing
6.1.4 Other Types
6.2 By End-User
6.2.1 Manufacturing
6.2.2 Government
6.2.3 BFSI
6.2.4 Healthcare
6.2.5 Retail and Consumer Goods
6.2.6 Logistics
6.2.7 Other End-Users
7.1 Company Profiles*
7.1.1 IBM Corporation
7.1.2 Accenture PLC
7.1.3 Microsoft Corporation
7.1.4 Infosys Limited
7.1.5 Wipro Limited
7.1.6 TATA Consultancy Services Limited
7.1.7 Capgemini SE
7.1.8 Atos SE
7.1.9 HCL Technologies Limited
7.1.10 Leidos Holdings, Inc.
7.1.11 Sphere Partners LLC
7.1.12 Kanda Software
7.1.13 Fingent Corp.
7.1.14 Intetics Inc.
7.1.15 Integris
7.1.16 Synoptek, LLC
7.1.17 Simform
7.1.18 MAS Global Consulting
7.1.19 Algoworks Solutions Inc
7.1.20 Icreon Holdings Inc
7.1.21 DevDigital LLC
7.1.22 Slalom, Inc.
7.1.23 VATES S.A.
7.1.24 Computer Solution East, Inc.
7.1.25 Perficient, Inc.
7.1.26 Innowise Group
7.1.27 Velvetech LLC
7.1.28 CHI Software
7.1.29 Edafio Technology Partners
7.1.30 VLink, Inc.
7.1.31 Ardem Incorporated
7.1.32 Unity Communications
7.1.33 Accedia
7.1.34 Intersog
7.1.35 Galaxy Weblinks LTD
7.1.36 Wave Access USA
7.1.37 Centricsit LLC
7.1.38 A3 Logics
7.1.39 Bottle Rocket LLC
7.1.40 Premier BPO, LLC
7.1.41 Sumerge
7.1.42 Peak Support, LLC
7.1.43 Progent Corporation
7.1.44 Sciencesoft USA Corporation
7.1.45 Intellectsoft US LLC

Companies Mentioned (Partial List)

A selection of companies mentioned in this report includes, but is not limited to:

  • IBM Corporation
  • Accenture
  • Microsoft
  • Infosys Limited
  • Wipro
  • TATA Consultancy Services Limited
  • Capgemini
  • Atos SE
  • HCL Technologies Limited
  • Leidos Holdings, Inc.