IT Services - Israel

Israel

In the year 2024, the projected revenue in the IT Services market of Israel is estimated to reach US$7.10bn.
This market segment is dominated by IT Outsourcing, with a projected market volume of US$2.88bn in the same year.
Looking ahead, the revenue is expected to exhibit a steady annual growth rate of 6.46% (CAGR 2024-2029), resulting in a market volume of US$9.71bn by the year 2029.
When it comes to the average spend per employee in the IT Services market, it is projected to reach US$1.58k in 2024.
It is worth noting that in a global comparison, United States is anticipated to generate the highest revenue in this market segment, with an estimated value of US$522.00bn in the year 2024.
Israel is emerging as a global leader in IT services, with its highly skilled workforce and innovative technology startups driving the market forward.

Key regions: United States, China, India, Japan, Germany

Definition:
The IT Services market encompasses a wide range of services used by organizations to create, manage, and deliver information, and it includes services that provide assistance with various other business functions. The primary goal of IT services is to ensure that information technology infrastructure, applications, and systems are effectively implemented, operated, and optimized to support an organization's business objectives and requirements. The specific range of services offered may vary depending on the service provider and the client's requirements.

Structure:

IT Services contains four distinct markets that are based on different services:

IT Consulting & Implementation covers advisory services that help businesses evaluate their technology strategies and align them with their business strategies or internal processes.
Business Process Outsourcing (BPO) refers to the transfer of entire business processes or individual activities from a company to a third party and is often IT based. BPO covers a wide variety of business processes, usually either in the back office (e.g., human resources) or in the front office (e.g., customer service in call centers).
IT Outsourcing refers to the external contracting of all IT-related services instead of relying on company-owned resources. In an IT context, these activities include IT administration, IT application, and web hosting services.
The Other IT Services market covers revenues for areas that are not specifically mentioned in the other markets, such as system integration, software installation and support, and IT education and training.

Additional Information:

The IT Services market comprises revenues, revenue change, average spend per employee, and a list of the key players in the market and their consolidated revenues. Market values represent revenues that are generated by primary vendors either directly or through distribution channels at the manufacturer price level (excluding VAT). Reported market revenues include spending by enterprises (B2B) and governments (B2G). Detailed definitions of each market can be found on the respective page where the market data is displayed. Key players in the market include IBM, Cognizant, Hewlett Packard Enterprise, and TCS.

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Analyst Opinion

Israel, known for its innovative and technology-driven economy, has a rapidly growing IT services market.

Customer preferences: The Israeli IT services market is driven by the demand for advanced technological solutions, including cloud computing, big data analytics, and cybersecurity. The Israeli government's focus on developing a start-up ecosystem has created a culture of innovation and entrepreneurship, leading to an increased demand for IT services.

Trends in the market: One of the key trends in the Israeli IT services market is the shift towards cloud-based solutions. Many companies are moving away from traditional on-premises solutions and adopting cloud-based services to improve their agility and reduce costs. Another trend is the increasing focus on cybersecurity, as companies seek to protect their data and systems from cyber threats. Additionally, there is a growing demand for big data analytics, as companies seek to extract insights from the large amounts of data they generate.

Local special circumstances: Israel's unique geopolitical situation has led to a focus on developing advanced security solutions, which has driven the growth of the cybersecurity sector. The country's small size and highly educated population have also contributed to the growth of the IT services market, as companies have access to a highly skilled workforce. Additionally, Israel's strong ties with the United States have led to many Israeli IT companies expanding into the US market.

Underlying macroeconomic factors: Israel's strong economy, driven by a highly skilled workforce and a focus on innovation, has contributed to the growth of the IT services market. The country's stable political situation and favorable business environment have also attracted foreign investment, further driving growth. Additionally, Israel's membership in the OECD has helped to promote economic growth and development.

Methodology

Data coverage:

The data encompasses B2G, B2B, and B2C enterprises. Figures are based on enterprises' technology spending on products, consulting, and outsourcing services.

Modeling approach / Market size:

Market sizes are determined through a combined top-down and bottom-up approach, building on a specific rationale for each market segment. As a basis for evaluating markets, we use annual financial reports of key players in the industry, Statista's primary research and surveys, and IT associations. In addition, we use relevant key market indicators and data from country-specific associations, such as GDP, internet users, and telecommunication. This data helps us estimate the market size for each country individually.

Forecasts:

In our forecasts, we apply diverse forecasting techniques. The selection of forecasting techniques is based on the behavior of the relevant market. For example, the exponential trend smoothing method is used based on the market data characteristics. The main drivers are the GDP and its sector composition, internet penetration, the level of digitization, and the attitude toward IT security.

Additional notes:

The data is modeled using current exchange rates. The market is updated twice a year in case market dynamics change. The impact of the COVID-19 pandemic and the Russia-Ukraine war is considered at a country-specific level.