IDC Presents Performance and Growth Strategies of the Top 10 Worldwide Services Vendors for 2006

FRAMINGHAM, MA – AUGUST 29, 2007 – In a new study, IDC reveals that the top 10 services companies in 2006 account for nearly one quarter of all services revenue worldwide. According to IDC research, IBM continues to lead the pack with $49.3 billion in services revenue in 2006. This is more than double the size of the next biggest vendor, EDS, which has $19.9 billion in services revenue. Accenture was in third place with $16.6 billion.

IDC's research indicates that outsourcing continues to grow in importance as a major segment for many of the top 10 vendors. It is the dominant revenue-generating service offering, not only for IBM but also for EDS, Fujitsu, CSC, and Northrop Grumman.

Project-oriented services still represent the leading services business for four of the top 10 companies: Accenture, Lockheed Martin, Capgemini, and Hitachi. Two of these companies, Lockheed Martin and Capgemini, were also the fastest growing in the project-oriented services market.

In the support/training services segment, the leading vendors were IBM and HP. Both IBM and HP experienced relatively flat growth rates in this segment for 2006, -0.6% and -0.2% respectively, which was better than the collective -1.2% growth rate in this segment for the top 10 providers combined.

"Providers are taking numerous strategic steps to improve revenue growth and profitability because service revenue growth rates for the top 35 providers have been declining for the past two calendar years," said Gard Little, program manager for IDC's Worldwide Services and Emerging Services Opportunities research programs. "We are predicting that this decline in the revenue growth rate will start to level off, with worldwide IT services spending producing a compound annual growth rate (CAGR) of about 6% over the next five years."

During 2006, the most important strategic actions of service providers included the following:

* Emphasizing business process outsourcing (BPO) and specific vertical industry experience as the path toward deeper and more profitable client relationships;

* Making significant investments in innovation and in research and development to fuel future growth and global sourcing options (IDC predicts the most significant investments will be in the development of both technology- and people-based global delivery networks.) and;

* Trying to improve internal business processes not only to reduce cost but also to create competitive advantage.

This IDC study, Worldwide Services 2006 Vendor Analysis: Performance and Growth Strategies of the Top 10 (IDC #207370) analyzes the IT and business services competitive landscape by examining and comparing the top 10 service providers worldwide. The purpose of this document is to help services players, their customers, and alliance partners differentiate the capabilities of firms that provide a wide array of offerings globally. The study looks at the performance of these firms in addition to their key growth strategies, competitive advantages, and challenges.

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