Only 'slight growth' for IT services in 2003, says Gartner

The IT services industry is going through one of its most difficult years, and the forecast for 2003 looks to be only slightly better, according to analysts, Dataquest Gartner.

A study by the company says worldwide IT services' revenue will reach $556.8 billion in 2002, a 2.8 percent increase from 2001 revenue of $541.9 billion.

It estimates worldwide revenue will rise more than six per cent on 2002 levels to reach $591.4 billion next year.

According to the study, 'process management' remains the highest-growing IT services segment, both in the short and long-term sectors. 'Hardware maintenance' and 'support maintenance' remain the slowest growing IT services.

Kathryn Hale, Principal Analyst for Gartner Dataquest, said: "Outsourcing of both IT management and process management will continue to grow faster than consulting services and development and integration services.

"This faster growth will result from vendors selling outsourcing services that enable buyers to both reduce their costs and improve their IT infrastructure."

The study found there are three factors that influence users' spending most on IT services:

• Decision makers' confidence in the value of IT and in the return on their investment;
  
• The pace at which IT vendors generate demand by implementing compelling new technologies; and,
  
• The speed at which users' aging technological assets require increasing maintenance and adaptation.

Robert De Souza, an industry analyst for Gartner Dataquest, said: "The first two factors have been undermined by continued weakness in the world economy and by the tenuous nature of the IT market's recovery.

"Decision makers' confidence in IT has been shaken. They have sought to cut costs by relying on their existing technological assets. This approach leaves little room for experimentation and innovation. As a result, buyers and vendors will find it even harder to decide which IT services to choose for the long term."

North America and Western Europe account for more than 75 per cent of worldwide IT services' revenue. The Asia/Pacific region is rated fourth in the world for IT services' revenue, but is forecast to have the strongest growth rate through 2006.

Worldwide IT Services Market Revenue Estimates by Region (Millions of U

Worldwide IT Services Market Revenue Estimates by Region (Millions of U.S. Dollars)

Region

2001

2002

2003

Asia/Pacific

27,598

30,065

33,442

Eastern Europe

6,978

7,356

7,819

Japan

64,805

64,775

70,314

Latin America

19,707

20,179

21,218

Middle East and Africa

9,086

9,470

10,027

North America

267,041

274,806

291,528

Western Europe

146,711

150,180

157,055

Total Market

541,926

556,830

591,404