Worldwide IT Services Market Facing a More Difficult Year Than Anticipated, IDC Says
FRAMINGHAM, MA – OCTOBER 8, 2002 – The IT services market is facing a more difficult year than IDC forecast at the outset of 2002. IDC has lowered the 2002 worldwide IT services growth rate to 6.7%, a reduction of 3.9 percentage points from the earlier forecast growth rate of 10.6% for the year. IDC also revised its 5-year-forecast and predicts that IT services spending worldwide will increase to $572 billion by 2006, a compound annual growth rate (CAGR) of 10.6%.
"The 2002 discrepancy is primarily the result of two market assumptions built into our forecast that did not hold true," says Ned May, program manager of IDC's Worldwide Services research. "First, IDC expected enterprise spending in the first half of 2002 to be stable. However, spending on many IT services actually declined during this period. Second, the anticipated pick-up in demand by the middle of 2002 is now not expected until the last quarter of 2002, and a full recovery is not expected until the spring of 2003."
IDC believes no region escaped lower growth rates in this midyear revision of IT services spending. In aggregate terms, the United States, closely followed by Canada, saw the largest downward revision in forecast spending for 2002 and beyond. The regions least impacted by this revision were Japan and Eastern Europe, Middle East, and Africida. Finally, the Asia/Pacific region, excluding Japan, also saw a downward revision in its overall growth rates, but the outlook for the IT services market still remain bright with an expected CAGR of 20.5% through 2006.
From an IT services perspective, project-oriented IT services markets such as systems integration, IS consulting, and custom application development suffered more severely than anticipated, and in aggregate, their 2002 growth rates were revised downward nearly 5 percentage points. IDC's forecast growth rates for all outsourced IT services – ranging from IS outsourcing to ASPs – were also lowered in this midyear update. However, in aggregate, the forecast growth for these markets remains a healthy 14.5% for 2002.
This bulletin, Worldwide IT Services: Midyear Forecast Update, 2002 (IDC #27898), presents a midyear update to the five-year forecast for the worldwide market for IT services. The purpose of this bulletin is to identify and quantify recent trends and events that are influencing the IT services opportunity midway through 2002 and discuss their impact on the worldwide five-year forecast. The document covers seven geographic regions and 12 foundation markets.
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