IDC Forecasts Worldwide IS Outsourcing Services Spending Will Surpass $100 Billion by 2005

FRAMINGHAM, MA – MAY 14, 2001 – Worldwide spending on information systems (IS) outsourcing services reached $56 billion in 2000 and is expected to surpass $100 billion by 2005, according to IDC. Although the United States will continue to account for the bulk of this spending, all companies around the world are increasingly turning to outsourcing to remain competitive in the global marketplace.

 

"IS outsourcing services outside the United States have increased substantially as a result of the healthy growth of outsourcing in traditional markets and the increasing acceptance of outsourcing in formerly untapped areas of Central and Eastern Europe, Latin America, Asia/Pacific, and Japan," said Cynthia Doyle, program manager of IDC’s IT and Offshore Outsourcing Strategies research. "As companies worldwide deal with forces such as deregulation, privatization, recession, globalization, lack of skilled personnel, shortages of resources, and dynamic technological and economic changes, outsourcing will continue to be an attractive operational alternative and source of competitive advantage for them."

According to IDC, the United States will continue to spend the most on IS outsourcing services, accounting for 44% of worldwide IS outsourcing spending in 2005. "Recent solid growth across several industries in the United States is the result of continued strong demand for multiservice IS outsourcing contracts that can include data center operations, desktop management, LAN/WAN management, application development and maintenance, help desk support, disaster recovery services, and Internet and ebusiness services," Doyle said.

Western Europe is the second-biggest spender, with spending on IS outsourcing services increasing at a compound annual growth rate (CAGR) of 10.3%, from $16 billion in 2000 to more than $26 billion in 2005. IDC forecasts the rest-of-the-world market segment will experience the highest spending increase during this time, with a CAGR of 21%. On its heels is Asia/Pacific, with a 2000-2005 CAGR of 20%.

Although the traditional drivers of outsourcing – to reduce operation costs, improve IS flexibility, focus on core competencies, and increase operational efficiency – still stand, IDC cites mounting evidence that companies have turned to outsourcing for more strategic reasons, including keeping up with cutting-edge technology, building partnerships, creating value for the organization and its customers, and broadening infrastructure and operational reach.

IDC’s report Worldwide IS Outsourcing Market Forecast and Analysis, 2000-2005 (IDC #B24547) analyzes the IS outsourcing market. U.S. and worldwide IS outsourcing spending forecasts are provided by region through 2005. Major trends, key drivers and inhibitors for outsourcing practices, and major vendors in each region are discussed. The top 10 U.S. and worldwide outsourcing deals are also highlighted. To purchase this report, contact Jim Nagle at 1-800-343-4952, extension 4549, or at jnagle@idc.com.

About IDC

IDC delivers dependable, high-impact insights and advice on the future of ebusiness, the Internet, and technology to help organizations make sound business decisions. IDC forecasts worldwide markets and trends and analyzes business strategies, technologies, and vendors, using a combination of rigorous primary research and in-depth competitive analysis. IDC provides global research with local content through more than 700 analysts in 43 countries worldwide. IDC's customers comprise the world's leading IT suppliers, IT organizations, ebusiness companies, and the financial community. Additional information can be found at http://www.idc.com.

IDC is a division of IDG, the world's leading IT media, research and exposition company.

 

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