Services Will Separate the Leaders from the Players in the IT Industry, IDC Says

FRAMINGHAM, MASS., FEBRUARY 23, 2000 — While hardware has become a commodity, what differentiates IT companies is the added value they can provide through services. This trend is not going to stop any time soon. As IDC observes, because of the migration of technology talents from non-IT companies into the IT industry as well as the economies of scale created by the one-to-many models applied by IT services providers, it will be more economical for companies to call on external IT services providers instead of fighting to keep their IS departments staffed and savvy about the new technologies. As a result of this evolution, IDC expects the worldwide IT services industry to increase at a compound annual growth rate (CAGR) of 10% by 2003 to reach nearly $472 billion.

Currently, IDC rates IBM Global Services as the number-one IT services provider in the world in terms of revenues, followed by EDS, Fujitsu, Andersen Consulting, and Computer Sciences. However, IDC warns the door to the top spots in the market is wide open.

"The scope of the services provided by IT services companies has been evolving. From services around products to system-related services and business process services, it is more difficult to identify IT services offerings that do not involve solving a business problem," said Sophie Mayo, manager for IDC's Worldwide Services research. "As a result of this change, the big names in the IT industry are no longer seen as the experts. Similar to the revolutionary era of the PC, the smaller, fast-growing entrepreneurial companies with specific expertise are meeting the demand for a new kind of packaged offering."

Of the current top 10 services providers, IDC is confident that IBM Global Services, EDS, Fujitsu, and CSC will maintain their positions but won't hedge bets on the remaining leaders in today's market.

"It will probably take a half decade before any company seriously threatens IBM Global Services' supremacy, and even then, it will be unlikely," Mayo said. "However, no services provider should be complacent. The threat of eroding market share won't come from only traditional IT players. When customers look for a logistics solution, for example, they might direct their attention to Ryder Integrated Logistics or UPS, which have not been on IT services providers’ traditional radar screen."

In its new report, Who Will Lead the Global IT Services Industry in 2000? A Competitive Analysis (IDC #B21223), IDC analyzes the competition in the worldwide IT services industry. The report discusses competitive trends, staffing concerns, marketing and branding strategies, partnerships and alliances, and IT solutions for specific areas. It ranks the top 25 service providers by revenues and ranks the top 5 services providers by IDC's competitive services categories. Additionally, the report profiles 10 leading service providers (IBM Global Services, EDS, Fujitsu Group, Andersen Consulting, Computer Sciences Corporation, Hewlett-Packard, Compaq Services, Oracle, Unisys, and PricewaterhouseCoopers). To order a copy of the report, contact Sally Donovan at 1-800-343-4952, ext. 4219 or at sdonovan@idc.com.

About IDC

IDC delivers dependable, relevant, and high-impact data and insight on information technology to help organizations make sound business and technology decisions. IDC forecasts worldwide IT markets and technology trends and analyzes IT products and vendors, using a combination of rigorous primary research and in-depth competitive analysis. IDC is committed to providing global research with local content through more than 500 analysts in 43 countries worldwide. IDC's customers comprise the world's leading IT suppliers, IT organizations, and the financial community. Additional information can be found at http://www.idc.com.

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

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