Globalization, Standardization, and Automation Drive Changes in the $663 Billion Worldwide Services Industry, IDC Reveals

FRAMINGHAM, MA – APRIL 18, 2006 – According to IDC, companies and governments will spend over $663 billion on external services worldwide in 2006, representing moderate growth of 6.8% from 2005. IDC predicts that worldwide spending will increase at a five-year compound annual growth rate of 6.9% during 2006-2010, ultimately reaching more than $866 billion. Throughout this forecast period, IDC believes that globalization, standardization, and automation will re-shape the growing worldwide services industry, and vendors will need to adopt new strategies to succeed amid these changes.

"Globalization, standardization, and automation will have profound impacts on the services industry," said Sophie Mayo, director for Worldwide Services at IDC. "The most significant examples include the globalization of services delivery, the standardization phenomenon in the software industry, and new technologies that drive the automation of services in both the consumption and internal delivery processes."

The study finds that outsourcing, in particular business outsourcing and application management services, continue to fuel the worldwide services industry. In addition, the project-based services segment has experienced continued, moderate growth. Regionally, IDC projects that the Americas, particularly the United States, will continue to host the majority of the services opportunity throughout the forecast period. However, the fastest-growing regions are Central Europe, the Middle East, and Africa (CEMA), Asia/Pacific excluding Japan, and Latin America.

Mayo adds, "The impact of the globalization phenomenon on developing countries' economies (e.g., Brazil, Russia, India, China (BRIC)) is fueling opportunities for large global services players, but also emerging players with new business models."

IDC recommends the following actions for successful services players in the changing industry landscape:

— Focus on attracting and retaining talent, as talent management will increasingly become a key differentiator.

— Consider BRIC (Brazil, Russia, India, China) strategically and differently. In addition to matching capabilities with the specific requirements of these countries, large players should also apply the lessons learned to serve all clients in a broad and seamless portfolio.

— Master the art of componentization and assembly, as vendors are seriously considering SOA at the core of the services portfolio and even delivery platform.

— Help your clients outsource, multisource, and insource. While there exists a huge pool of organizations that will never outsource, vendors must introduce insourcing, and help them optimize internal shared services centers.

The IDC study, Worldwide Services 2006-2010 Forecast (IDC #35037), presents a five-year forecast for the worldwide services industry from 2006 through 2010. The document analyzes the recent worldwide and specific regional trends influencing services opportunities, and presents market sizing and five-year growth forecasts for 14 discrete service engagement types and segmentation in the following regions: United States, Canada, Latin America, Western Europe, Central Europe, the Middle East, and Africa (CEMA), Japan, and Asia/Pacific. Also provided is essential guidance for services firms competing in the IT and business services market.

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About IDC

IDC is the premier global provider of market intelligence, advisory services, and events for the information technology, telecommunications, and consumer technology markets. IDC helps IT professionals, business executives, and the investment community make fact-based decisions on technology purchases and business strategy. Over 850 IDC analysts in 50 countries provide global, regional, and local expertise on technology and industry opportunities and trends. For more than 42 years, IDC has provided strategic insights to help our clients achieve their key business objectives. IDC is a subsidiary of IDG, the world's leading technology media, research, and events company. You can learn more about IDC by visiting