Amazon Web Services jumped to the top of the UK software and IT services industry in 2022, knocking TCS off its perch as Microsoft's growth lagged its rivals and dropped out of the top three.

This is according to customer spending figures compiled by venerable analyst TechMarketView (TMV), which showed the local market grew by 12.2 percent in the 12 months to £67.7 billion ($86.15 billion), its fastest rate in more than a decade.

The data shows that AWS expanded revenues in Britain by 30.1 percent year-on-year to £3.78 billion, compared to 35.5 percent growth in 2021. AWS was closely followed by Accenture, which grew 30 percent to £3.623 billion and took second spot. Former market leader TCS grew 16.6 percent to £3.491 billion and Microsoft slotted into fourth spot after reporting growth of 17.5 percent to £3.382 billion.

"They're really pulling away in terms of growth and scale," TMV said of AWS, which was the clear leader in infrastructure services where it competes fiercely with Microsoft's Azure and is still outpacing it.

TMV told us Accenture expanded consulting revenue by a third, which chimed with its view that customers are trying to use past investments in cloud where they might not have seen expected return on investment. Accenture is one of the world's largest cloud resellers.

In fifth was Capgemini, up 16.7 percent to £2.352 billion, and Capita - formerly the UK's long-running software and IT services leader - grew just 1.8 percent to £2.32 billion. Capita's turnaround efforts are well documented. IBM, HCL Tech, Oracle and Atos rounded out the top 10.

The pandemic years were kind to tech businesses but since last autumn, growth has moderated as economic uncertainty fueled by record inflation, along with political uncertainty caused by the war in Ukraine, forced businesses to spend more conservatively.

TMV is anticipating a dip in software and tech services growth in 2023, down to 6.9 percent year-on-year, and is forecasting an annual compound growth rate of 5.8 percent through to 2026. It said the analysis reflects the "ongoing productivity crisis" in Britain that will continue to fuel customers' local investments in tech.

"The UK tech industry has a big role to play in improving the UK productivity picture," said Georgina O'Toole, chief analyst at TMV. "With the right investment, it is perfectly placed to improve the productivity of its clients' organisations, as well as supporting the productivity of the UK more generally."

El Reg would like to point out it wishes some of these businesses paid more tax locally, but this is a global problem, and a global solution is required.

According to stats crunched by the UK's Office of National Statistics, productivity in the UK during Q1 of this year was 0.6 percent lower than the same period in 2022. It declined 1.4 percent sequentially and was flat with Q4 2019, prior to the pandemic.

Businesses will need to review how they address productivity and at the same time juggle continued inflationary pressures and a shortfall in labor requirements, the analyst told us.

"Our analysis suggests that current challenges, and the potential opportunities for technology to help address them, will continue to push strong demand in the UK software and IT services market - albeit at a more measured pace - over the forecast window," added O'Toole.

We have asked Microsoft and AWS to comment. ®

https://www.theregister.com//2023/07/06/microsoft_uk_software_services/