Public sector cut backs are behind falling sales by ICT services companies around the world, according to a new report by research firm Ovum.

Sales plummeted by 40% between April and June this year compared with the same period in 2010 for such players. Previously, public sector spending has offset a slump in demand for outsourcing and other services by private sector firms' now them days seem to have gone, with the latest quarter being marked by a noticeable reduction in large contracts, according to this research. Indeed no contracts worth more than $1bn were signed during the entire three month period, with North America taking the biggest hit. 

However, suppliers remain optimistic according to a separate survey of outsourcers by another set of market watchers, Gartner. This study claims this set of suppliers all have aggressive marketing plans for Cloud, utility and software as a service products.

“Growth is back on the agenda for IT outsourcing (ITO) providers,” says the advisory firm, claiming 62% of respondents identified growth as their top strategic goal this year.

Still, traditional business models are being turned inside out, Gartner goes on - a trend unlikely to stop any time soon. “It started with new business models and the Cloud ecosystem; these trends will continue to impact the outsourcing business.”