IDC U.S. Services Forecast Finds Significant Growth Opportunities Among Small and Medium-Sized Businesses

FRAMINGHAM, MA – JUNE 21, 2004 – In its first forecast of the U.S. services market by company size, IDC found that spending on outsourcing of both business processes and IT will grow significantly faster than spending on project services such as consulting. And within both of these markets, the "sweet spot" for long-term growth will be medium-sized companies in the 100-999 employee range that are taking advantage of the greater capabilities and lower prices of information technology and the services needed to integrate IT further into their business processes. Over the next five years, IDC forecasts a 7% compound annual growth rate (CAGR) for the U.S. services market.

"Although it is a relatively small portion of the overall services market currently, the small and medium-sized businesses (SMB) segment represents a significant opportunity for services companies. They are concerned with many of the same issues of security, availability, and leveragability of IT as are large companies, where lessons learned from these engagements can be applied in a templated fashion. Service vendors should seek to build more direct relationships with SMBs for the time when capabilities such as utility computing and services-oriented architectures reach this segment," said Rebecca Segal, vice president, Worldwide Services and Midtier IT Services Provider Strategies research at IDC.

Additional key findings from this study include:

— Spending by SMBs (companies with fewer than 1,000 employees) will account for 26% of total services spending by 2008.

— A smaller percentage of SMBs buy IT and business services currently (as compared with large businesses), but that percentage is set to increase dramatically.

— Spending by very large businesses (companies with more than 10,000 employees) will decrease to 43% of the market in 2008.

IDC's new study, United States Services Market 2003-2008 Forecast and Analysis: Opportunities by Company Size (IDC #31370), presents a five year forecast of the U.S. services market and identifies recent trends that are influencing the U.S. services opportunities and compares the services opportunities of project-based services, outsourcing services, and support services across companies of various sizes.

To purchase this document, call IDC's sales hotline at 508-988-7988 or email

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