Worldwide Services Spending Will Continue Healthy 6.9% Growth Over the Next Five Years, Says IDC
FRAMINGHAM, MA – November 17, 2004 – Despite geopolitical unrest, IDC sees no dampening effect on the services industry spending expectations so far this year. Companies and governments will spend $553 billion on external services in 2004, and IDC forecasts worldwide services spending to continue at a compound annual growth rate (CAGR) of 6.9% over the next five years.
"The worldwide services industry continues to redefine itself," said Sophie Mayo, director for Worldwide Services at IDC. "The vision for a utility-based computing model and the transformational focus that most companies have on their agenda today have started to redefine partnership structures, offshore strategies, and project-based services delivery as well as the still nascent business process outsourcing market. The industry certainly continues its transitional journey."
Most leading global vendors see acquisitions as an important part of their strategy and IDC expects continued market consolidation to add to their growth and increasing dominance. Europe, in particular, is a very fertile ground for services market consolidation and merger and acquisition activity.
Global IT services players will keep building their offshore capabilities in order to provide flexible delivery models and "on demand" resources around the world. IDC expects further price declines for commoditized skills in the application management services, software-as-a-service, and application development markets. The emergence of utility/on-demand services in outsourcing contracts will also add some pressure at renegotiation time.
IDC's report, Worldwide Services 2004-2008 Forecast Update: 1H04 Analysis (IDC #32144), presents a five-year forecast for the worldwide services industry from 2004-2008. The document examines the assumptions related to the forecast and market trends and provides an overview of the major trends in each geographic region. The study concludes with recommendations for services firms competing in the IT services market.
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