Next year will be grim for the IT services sector as organisations
pare down spending to essentials, but the situation will improve in
2003, according to analyst firm Gartner Dataquest.
Spending on IT services rose in 2001, but Gartner predicts that it
will dip next year before increasing again in 2003, as businesses
grapple with the effects of the economic slowdown and the 11
September terrorist attacks in the US.
Gartner calculated that international revenue from IT services
increased by 7.1% this year, to $554bn (£390bn). The analyst firm
predicts that the figure will reach $865bn by 2005.
The US is the biggest services market, with revenues hitting $271bn
in 2001. Western Europe will report the second largest share at
$149bn, with Gartner predicting that it will hit $229bn in 2005.
"Following 2002, increased confidence in the economy and business
will present vendors with an opportunity to drive renewed demand
among end-users," said Kathryn Hale, a principal analyst at
Gartner.
However, until the economy picks up, companies will rely on what
Hale describes as "life-preserver" services, which include payment
processing, applications and data centre outsourcing, product
support services, and security and disaster recovery.
"If senior executives can reasonably predict how the economy and
security situation will play out, they could make investment
decisions to compete in any environment, and begin buying IT
services again," Hale said.
She predicted the increased adoption of mobile applications, Web
services and communication convergence, adding that Windows XP,
increased demand for customer relationship management, supply chain
management and e-commerce solutions would drive growth at the
beginning of 2003.