Euro Managed Services Sales Slowing?

Managed IP PBX contracts won by European telecom service providers declined by an order of magnitude during the first half of 2007, says Phil Sayer, Forrester Research analyst.

The number of IP PBX managed services deals fell to three percent of deals, where in the first half of 2006 managed IP PBX deals were part of 39 percent of new contracts.

Forrester says there was an equally massive drop in the number of deals involving managed security services as well. The only IT service that recorded any increase was the provision of help desks.

Overall telco IT services sales with an IT services component was down from 31 percent to 22 percent.

It isn't yet clear whether that trend was seen in other regions, whether it continued through the balance of 2007, or what it means, if indeed the trend did continue.

Most likely, the data suggest a shift of buying to other channels, rather than a decline in aggregate purchasing. The survey suggests that most of the service provider sales were of the small sort. It is most likely the case that value added resellers and other providers now are increasingly active in that market with services that compete directly with service provider offerings.

The total number of managed services contracts signed in the first half of 2007 by European telecom service providers also showed a decline in the number of deals, compared to the first half of 2006, with slight less contract value.

Where 188 deals were reported by the participating carriers in the first half of 2006, with a contract value of €1.6 billion, contract value in the first half of 2007 was roughly flat at €1.5 billion.

The majority of deals continued to be small, but the increase in the average deal size was the result of a small number of very large contracts.