Computer System Design Services


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Industry Profile Report

Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters

Industry Overview Industry Structure, How Firms Opertate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.

Call Preparation Quarterly Insight, Call Prep Questions, Industry Terms, and Weblinks.

Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.

Industry Profile Excerpts

Industry Overview

The 45,400 computer system design services providers in the US integrate computer hardware, software, and communication technologies. Types of services include computer systems design, development, and integration; customer application design and development; and IT technical consulting and support. Firms may also provide services related to network development and design, cybersecurity, and communications.

Dependence on Skilled Labor

The computer system design services industry relies on a highly skilled, highly paid workforce, which includes computer and software engineers, programmers, systems integrators, and management with experience in information technology.

Rapid Advances in Technology

The computer and information systems management industry is characterized by rapid advances in technology that create volatility and uncertainty.

Industry size & Structure

The average computer system design service provider operates out of a single location, employs about 22-23 workers, and generates about $4-5 million annually.

    • The computer system design services industry consists of about 45,400 companies that employ over 1 million workers and generate over $204 billion annually.
    • The industry is concentrated at the top and fragmented at the bottom; the top 50 companies account for 55% of industry revenue.
    • Large firms, which include IBM, GDIT, and Unisys, typically have global operations.
                                    Industry Forecast
                                    Computer System Design Services Industry Growth

                                    Coronavirus Update

                                    Nov 19, 2021 - Global Cloud Infrastructure Spending Declined in Q2
                                    • Artificial intelligence (AI) is being used in a variety of ways in response to the coronavirus outbreak, which could create opportunities for computer system design services firms. UK-based BenevolentAI used its platform to analyze a massive trove of biomedical data through machine learning to make connections that led to identifying existing drugs that could be effective in treating COVID-19 patients. BenevolentAI’s technology identified an Eli Lilly drug called barcitinib that might help COVID-19 patients. When tested on patients, barcitinib contributed to a 71% reduction in deaths among those with moderate to severe cases on COVID-19. Scientists are also using AI to reveal patterns is various data from patients infected with COVID-19 to discover why some barely experience any symptoms and others die. AI may also help doctors and scientists better understand how the novel coronavirus interacts with preexisting ailments to affect the immune system, which could lead to better outcomes for vulnerable patients.
                                    • Technology experts have noted that outdated IT systems used in various federal government agencies delayed stimulus aid disbursements and other critical services. Experts have suggested legacy IT systems led to small businesses being unable to apply for loans through the Small Business Administration and difficulties in consumers making unemployment benefit claims. Technology insiders say federal agencies need to leverage modern private sector technologies to speed up IT modernization efforts. High numbers of new unemployment claims also crashed antiquated IT systems on the state level. Many states’ computer systems for managing unemployment benefits are more than 40 years old. Neither the CARES Act, nor the two more recent stimulus packages, provide any funding to states for modernization of state unemployment benefit IT systems. More attention to inefficient legacy systems could lead to opportunities for computer system design firms. Gartner expects global IT spending by governments to increase 6.5% to $557.3 billion in 2022. Responding to and recovering from the COVID-19 pandemic, will drive governments to spend more on their digital transformations. After rising a projected 17.6% in 2021, device spending is forecast to moderate and will fall 1.6% in 2022. Government spending on IT infrastructure and digital transformation will be enhanced by pandemic-related government stimulus packages like the US’s American Rescue Plan Act, and the European Union’s NextGenEU.
                                    • The pandemic could affect demand for computer system design services if small businesses cut back on investments, go out of business, or the rate of new business formations slows. While Delta fears have eased, 90% of small business owners in the US and Canada say they are concerned that inflation will impede their ability to recover economically from the pandemic, according to the November 2021 Road to Recovery Report by Alignable, a social media outlet for small business owners. Nearly three-quarters of small business owners have yet to fully recover, and only 27% report that they are at or above pre-COVID-19 revenue levels.
                                    • Amid the coronavirus pandemic and worldwide economic slowdown, global IT spending still managed to rise 0.9% to over $3.8 trillion in 2020 compared to 2019, according to Gartner. Spending on devices fell 1.5% to about $697 billion in 2020; data center systems spending grew 2.5% to nearly $179 billion. Gartner expects IT spending to bounce back to 9.5% growth in 2021, and reach $4.2 billion. Device spending is projected to rise 15.1%, and data center systems will see growth of 9.7%. IT spending is expected to moderate in 2022, rising 5.5% to more than $4.4 trillion. Device spending is forecast to rise 2.3% in 2022, and data center systems will see 5.8% growth. As companies accelerate their digital transformations, IT spending is increasingly viewed as a vital contributor to the bottom line rather than a back-office expense, according to Gartner.
                                    • At the onset of the pandemic, many organizations increased IT security spending as they implemented distributed IT and work-from-home environments, according to a recent IDG Research Services survey commissioned by Insight Enterprises. The rapid transition to work-from-home brought new security challenges across cloud, edge, and on-premise computing environments. Even after beefing up IT security spending amid the pandemic, 80% of senior IT and IT security leaders feel their organizations have insufficient protection from cyberthreats. More than 90% of organizations surveyed said they planned to increase cybersecurity spending in 2021. Demand for computer system design services may increase as organizations address the constantly evolving nature of cyberthreats and their potential impact on distributed IT environments.
                                    • The ways the pandemic affected work, school, and home life will continue to drive global computing device demand in 2021 and 2022. The installed base of devices will rise 2.3% to more than 6.2 billion in 2021 over 2020, according to Gartner. The shift to remote work and school is expected to continue to erode demand for desktop computing. However, the number of laptops and tablets in use in 2021 will rise 8.8% and 11.7%, respectively. The number of smartphones in use in 2020 fell 2.6% compared to 2019, but increased product variety and more affordable 5G models will drive upgrades and a 1% increase in 2021. The global installed base of computing devices is forecast to rise 3.2% in 2022 over 2021 to 6.4 billion units.
                                    • A global semiconductor shortage is affecting production of most types of electronic equipment, including IT gear. At the onset of the pandemic, consumer buying patterns shifted and supply chains were disrupted. Carmakers cut back on production - and computer chip consumption - while home-bound consumers ramped up purchases of computers, game consoles, and other chip-containing electronics. When auto production bounced back, the whipsaw in chip demand made the semiconductor shortage worse. Gartner expects the shortage could persist into Q2 of 2022. Gartner suggests chip-dependent industries extend their supply chain visibility to the silicon level to better project supply constraints and bottlenecks. Tech industry watchers suggest consumers and businesses should plan to spend more for chip-heavy products and expect extended lead and/or wait times. The CEO of Intel has said that while there is likely to be improvement in 2022, the shortage could persist into 2023. Several chip firms have plans to expand their manufacturing capacity, but some industry insiders think it could be 2023 before much of the planned additional capacity comes online, according to CNBC.
                                    • The pandemic is accelerating CFO investments in digital strategies and IT, according to Gartner. More than 80% of CFOs surveyed by Gartner said they planned to increase spending on digital capabilities in fiscal 2021 compared to fiscal 2020. Earlier in the pandemic companies scrambled to digitize as many processes as they could to support virtual work environments. Those investments are expected to continue as firms seek to leverage technology in ways that provide a competitive edge. While digital capabilities topped CFOs’ wish lists, IT spending was a strong second with 70% of CFOs saying they planned to increase IT investments in 2021. Gartner suggests organizations should have a centralized technology roadmap that gathers inputs from all parts of the business to ensure greater buy-in, and reduce tech siloes in individual departments.
                                    • After six consecutive quarters of year-over-year growth, worldwide spending on computer and storage products for cloud infrastructure fell 2.4% in the second quarter of 2021 compared to the same period in 2020, according to an October report by International Data Corporation (IDC). Shared cloud infrastructure spending led the decline as year-over-year spending fell 6.1% to $11.9 billion. However, spending in Q2 2020 was exceptionally high due to ramped up investments to meet the huge spike in cloud services demand early in the pandemic. Dedicated cloud infrastructure spending in Q2 2021 was up 7.8% and reached $4.9 billion. Despite weaker year-over-year demand for cloud infrastructure investments in Q2, IDC expects full-year 2021 spending to rise 12% to $74.3 billion. Shared cloud infrastructure investments are forecast to rise 11.1% to $73.3 billion in 2021; dedicated cloud spending is projected to grow 14.1% and reach $22.8 billion. After two years of spending declines, non-cloud computer and storage product infrastructure investments are forecast to rise 2.7% to $58.9 billion.
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