Business Consulting Poised to Grow Over the Next 5 Years Due to Accelerating Link With IT, IDC Reveals

FRAMINGHAM, MA – JUNE 7, 2006 – According to a recent IDC study, business consulting will be an area of increasing focus and innovation for services providers, as well as greater user spending. IDC expects worldwide business consulting spending to increase at a compound annual growth rate (CAGR) of 3.9% from 2005-2010. The study attributes this upward forecast primarily to the accelerating convergence of business and IT processes. This increasing link between business and IT is in part causing nearly all general management consultancies (GMCs), advisory firms, and consulting niche players to significantly build up their technology-focused capabilities, intellectual property (IP), and talent.

"The growing convergence of business and IT – in dialogue and in fact – has obscured many of the strict distinctions between the IT and business sides of consulting services," said Bo Di Muccio, program manager for Consulting Services at IDC. "While the nature of the activities and players in these markets still warrants treating IT and business consulting separately, the primary implication of this convergence is that the business consulting market is more closely tied to IT than ever. IDC believes that the worldwide business consulting market is poised to settle into a phase of growth that will be stronger than we have been predicting for some time."

The study finds that business consulting spending will not grow uniformly across geographies. From a large base, business consulting will grow slowest in the Americas, fastest in Asia/Pacific, and at a pace approximately in the middle in EMEA. For this reason, the Americas region will lose business consulting spending share slightly over the next five years to both EMEA and Asia/Pacific. However, the study finds that throughout the forecast period the Americas will be the locus of well over half of all global business consulting spending, and will be the principal geographic driver of dynamics in this market.

"As business consulting services providers universally scramble to acquire technically focused talent and build technical capabilities and intellectual property, their ability to deliver across business and IT functions is becoming less and less of a potential differentiator," added Di Muccio. "Therefore, business consultants will increasingly be forced to find other ways of differentiating themselves, and one example is through the productization of business consulting offerings."

The study, Worldwide Business Consulting Services 2006-2010 Forecast (IDC #201649), offers a comprehensive analysis of the global business consulting market and provides a five-year forecast based on analysis of consulting buyers' needs and behavior, market trends and imperatives, the competitive landscape, pricing, and talent management dynamics. Worldwide business consulting spending is segmented by geographic region and service line. The study also provides a comparison of IDC's 2005 and 2006 forecasts, along with guidance for providers of business consulting services, management consultancies, advisory firms, IT services firms, and buyers of business consulting services.

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