The IT services sector is surprisingly fragmented despite the domination of the very large and internationally active consultancies. In part this is explained by the large number of companies offering customisation of off-the-shelf software, a factor which is particularly relevant to database usage. It is also a feature of the sector that there are myriad small companies with niche capabilities and niche appeal. Such companies often feed the merger and acquisition activity so prevalent at the top end of the market.

COVID-19 has had the impact of accelerating the digital programmes of companies, partly reflecting the issues created by lockdowns and remote working. This has provided some added growth to the IT services sector in 2020 and is continuing into 2021.

There are few threats to the industry in total. By far the biggest issue in the short term is the considerable disruption caused by COVID-19 to the end-use markets, and there will inevitably be large numbers of corporate casualties. The diverse client base of the largest IT services companies will provide some protection from the development, while the smaller companies that are over-reliant on a few large contracts may be seen to be vulnerable. This too is likely to lead to further merger and acquisition activity.

The trend towards digitisation is an irreversible process, and will be further enhanced in the wider recovery period as efficiency and productivity become critical features of corporate survival and development. The migration to cloud computing also appears an irreversible process that is gaining momentum.

• How the COVID-19 impact has accelerated corporate digital development.

• The continued rate of growth of the market despite the widespread economic disruptions.

• How cloud computing is impacting the market.

• How IT infrastructures were not developed or designed for the level of remote working seen in 2020.

The first COVID-19 cases were confirmed in the UK at the end of January 2020, with a small number of cases in February. Rapidly rising case numbers led to the first national lockdown, starting on 23 March. It wasn't until 15 June that non-essential stores were allowed to reopen, followed by pubs, restaurants, hotels and hairdressers on 4 July and many beauty businesses on 13 July.

By September, it had become clear that the UK was at the start of a second wave, and social distancing measures were intensified. Continued increases in infection numbers led to Wales implementing a two-week national lockdown from 19 October, England announcing a month-long lockdown from 5 November and Scotland introducing a new five-level system of coronavirus restrictions.

Despite these restrictions, however, case numbers continued to increase. All four UK nations tightened restrictions further in January 2021, effectively leading to a full UK-wide lockdown.

On 22 February, Boris Johnson announced the roadmap to an easing of restrictions in England, starting with the reopening of schools on 8 March, followed by easing of restrictions on outdoor gatherings on 29 March, and with a hoped end to all restrictions by 21 June. The Welsh and Scottish governments also gave more details on their plans to ease restrictions, with both nations taking a slightly more cautious approach to the one planned for England.

The UK’s vaccination programme started on 8 December 2020, and with the Pfizer-BioNTech, Moderna and Oxford-AstraZeneca vaccines licensed for use in the UK, the government aims to offer a first dose of the vaccine to 32 million people by mid-April.

Mintel’s economic assumptions are based on the Office for Budget Responsibility’s central scenario included in its March 2021 Economic and Fiscal Outlook Report. After the fall of 9.9% over the course of 2020, the scenario suggests that UK GDP will grow by 4% in 2021 and 7.3% in 2022.

GDP isn’t expected to return to pre-COVID-19 levels until Q2 2022, although this is six months earlier than the OBR forecast in November 2020, mainly because of the faster than expected rollout of vaccines.

Unemployment is expected to peak at 6.5% in Q4 2021. As with GDP, this is more positive than the OBR’s November forecast, but the OBR does raise the prospect of long-term scarring on employment, especially in the more exposed retail and hospitality sectors.

This Report is concerned with information technology (IT) services. The market has two major elements:

• IT consultancy

• other information technology and computer services.

IT consultancy – also called IT consulting, computer consultancy, business and technology services, computing consultancy, technology consulting and IT advisory – is a market and industry that focuses on advising businesses on how best to use information technology to meet their objectives. In recent years a specific sector of the market has arisen that addresses the facilities management computer services sector. More typically, the IT consultancy sector can be segmented into two separate areas: strategic advice and systems integration. Often, but not exclusively, these will be conducted in tandem initially, forming part of an initial contract. Subsequently there tends to be further integration work which can then be conducted in isolation.

There is a relatively unclear line between management consulting and IT consulting. There are sometimes overlaps between the two fields, and most major international management consultancies are engaged in IT consultancy. There are also specialist IT companies that are strongly active in the sector.

In addition to providing advice, IT consultancies often estimate, manage, implement, deploy and administer IT systems on businesses' behalf, which is known as outsourcing. The other information technology and computer services typically incorporates one or more of:

• applications

• mainframe

• network

• desktop

• distributed environment

• hardware support.