How can I analyse the drivers and future demand for time & material services in the IT services sector in Spain?
The question is that IT services in Spain follow a taxonomy similar to the following (for business to business):
- Time&Material services: in which the consultancy company invoices the client by the hour. In other words, a consultant is made available to the client and the client is billed on a monthly basis for the hours worked on the services. In this case, the nature of the service means that the risk is assumed by the client, as the consultant does not work by objectives and does not have a predefined scope.
- Managed services: in which a service contract is drawn up, normally application maintenance services, and a team is assembled, the members of which are usually under the decision of the service provider, since what is agreed is a quality of service.
- Fixed-price projects: in which the provider agrees with the client on the work to be done and will invoice for it at a price previously agreed in the contract. The risk is assumed by the supplier, since if the project deviates in time or effort, the cost is assumed by the supplier.
- Agile projects: which are invoiced by sprints. If a sprint is determined for example in 2 weeks, a price per sprint is fixed for the client. It is a service model that is similar to T&M or managed service, depending on the agreement between supplier and client regarding the members of the technical team. Except that a price is determined for the team for the 2-week sprint.
My question is directed to service type 1, i.e. T&M. I am interested in knowing how to develop a framework or approach to analyse the drivers that drive the demand for this type of service in Spain (or in Europe) taking into account the current reality, i.e., taking into account that we are in a pandemic, that the interests of customers are changing, and that service models are changing. The objective with the development of this framework or approach is to answer the following question:
Will Time&Material services in the IT market tend to become more demanded or will they become less and less demanded? It is understood that if they are less demanded it is because customers will prefer another type of service.
As a basic simplification of the proposed approach, we could be tempted to say that in the midst of a pandemic like the current one, companies are under much more pressure with prices and competition, which leads them to control costs more, and this is achieved with fixed services. But that is a huge oversimplification, and we would be making the mistake of underestimating the cons of fixed-price services (closed projects).