According to the latest “China IT Service Market (Second Half of 2023) Tracking Report” released by IDC, the overall size of China's IT service market reached 17.66 billion US dollars (about 148.74 billion yuan) in the second half of 2023, which is basically in line with the 4.6% forecast for the previous period. Among them, the project service market increased 4.6% year on year, the management service market increased 5.9% year on year, and the support service market increased 2.4% year on year.

In terms of the overall share of the IT service market in China, the operator camp accounts for 76.2%, Huawei accounts for 10.3%, and Lenovo (00992) accounts for 4.0%.

In terms of IT consulting and integrated services market share, Huawei accounted for 84.9%, IBM 4.6%, and Lenovo 2.8%.

In terms of customized development services market share in China, Chinasoft International (00354) accounts for 80.6%, CLP Jinxin accounts for 5.1%, and Shenzhou Information accounts for 4.5%.

In terms of the market share of managed services in China (excluding hosting infrastructure), Lenovo accounts for 80.3%, Huawei for 7.3%, and H3C for 5.7%.

In terms of the market share of managed infrastructure services, Telecom, Mobile, and Unicom accounted for 20.0%, 17.6%, and 15.8% respectively; Universal Data (09698) accounted for 8.9%.

The market share of support services is as follows:

Affected by multiple factors such as the new round of geopolitical crises such as the Israeli-Palestinian conflict and the global economic downturn, China's economy and industrial operations have entered a cycle of pressure since 2023. Corporate digital spending has not been as good as expected, but the overall economy boosted in the second half of the year. Affected by this, the overall vitality of China's IT service market has recovered in this period:

Businesses such as data and generative AI drive project service market development: On the one hand, the promotion and implementation of relevant policies such as the “Data Element ×” three-year action plan (2024-2026) has brought projects such as data center, data governance/analysis, and data security into the accelerated implementation stage — there has been an increase in data consulting/construction/development projects adapted to different industries such as government, the Internet, and finance. On the other hand, generative AI has promoted the construction of more than 100 intelligent computing infrastructure and public training data resource platforms led by governments, universities, and enterprises. At the same time, consulting and expert services around large model training/inference and related scenarios are showing initial scale. These have all brought momentum to the development of project-based services.

The stock market for management services is relatively stable: the recent slowdown in the growth rate of the public cloud market has reduced demand from cloud vendors for the hosting infrastructure-hosting market. Although there are still a few businesses that are still growing in demand for managed infrastructure services, most internet customers did not perform well in the second half of the year. Furthermore, the number of private clouds, hybrid clouds, and existing IT infrastructure is still huge, and enterprises still have high demands for professional management services such as application management, network management, and IT outsourcing.

The support services market has resumed growth: The development of large models has had a positive impact on intelligent computing-related infrastructure, accelerating significant growth in related hardware devices such as computing servers and Ethernet switches, which will drive the continued growth of related deployment and support services. At the same time, demand for development and deployment of various types of cloud-based platform/application layer software is still strong, which brings some support to the software deployment and support service market. In addition, the use of intelligent computing infrastructure clusters and platforms related to large models places higher demands on the overall quality of enterprise IT practitioners, and enterprises are increasing their demand for AI-related training.

The IT service market as defined by IDC is composed of three tier one sub-markets: project services, management services, and support services. The three primary markets are also subdivided into 12 secondary markets — project services include IT consulting, system integration, network consulting and integration, and customized software development; management services include application management, managed application management, network and terminal management, IT outsourcing, and hosting infrastructure; and support services include hardware deployment and support, software deployment and support, and IT education and training.