Despite Challenges, Solution Services Markets to Resume Slight Growth by 2004, IDC Says
FRAMINGHAM, MA – MAY 5, 2003 – Despite short-term challenges, a new report from IDC predicts that slight growth will resume in the worldwide and U.S. solution services markets. Solutions services markets have been hampered by the economic slowdown, upheaval in the competitive landscape, tight IT budgets for external services, and overall buyer frustration. Nonetheless, after experiencing a decline in 2002, all worldwide and U.S. solution services markets, except for ecommerce services, are expected to rebound in late 2003 and 2004.
IDC forecasts that the supply chain management (SCM) services market will represent the largest opportunity, reaching $40.5 billion in 2007 and surpassing enterprise resource management (ERM) services in market size by 2005. Customer relationship management (CRM) services will remain ahead of ecommerce services, representing the third largest opportunity through the forecast period with a compound annual growth rate (CAGR) of 8.5%. Lastly, content management (CM) services, knowledge management (KM) services, and globalization and localization (G&L) services will represent the fastest-growing but smallest market opportunities, growing at 12.8%, 16.8%, and 13.9%, respectively, over the forecast period.
"IDC believes that uncertainty surrounding the war in Iraq and the economy will continue to hamper spending, “ said Stephanie Torto, program manager for Systems Integration Services at IDC. ”However, given the diversity of services required in the solution services markets, the industry should weather the storm in 2003 fairly well and experience slight growth, particularly in outsourcing services."
Other key findings discussed in this report are the following:
Customer services, information security, and supply chain are among the top priority areas for customers to invest in.
Optimization of existing technologies and systems will continue to drive the market as a result of the large IT investments made during the 1990s (especially in lieu of a "hot" new technology).
Services firms must continue to be client focused and present holistic solutions that address customers' business needs.
The IDC study, Worldwide and U.S. Solutions Services Forecast, 2003-2007 (IDC #29218), presents the worldwide and U.S. solutions services forecasts for 2003-2007. The document examines the assumptions related to the forecast and the key buyer and vendor trends. Lastly, the study provides an overview of the major trends by solution services market, and presents recommendations for services firms competing in this space.
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