Research company IDC has released a report that
indicates the systems integration (SI) services market will start
to recover in the second half of 2003, and will grow by 6% next
year.
The study, entitled Worldwide and US Systems Integration
Services Forecast and Analysis 2003-2007, predicted that the
worldwide SI market will increase from about $65.5bn (£41.1bn) in
2002 to $82.8bn (£52bn) in 2007.
"Our expectation is that between 2003 and 2007 there will be a
positive growth rate of 2.3% per year," he said. "So there is some
expectation for growth going forward, but the growth rate we have
now is a lot lower than what we had the previous forecast last
year," said Jim Westcott, senior research analyst at IDC
Canada.
"A lot of these project-based services categories [including SI
services] are tied to not only discretionary spending, but
profitability, and because profitability has been under intense
pressure for the last couple of years companies don’t have a lot of
money that they can throw at big integration projects," he
explained.
Customers are apprehensive about making large IT investments
without fully understanding return on investment (ROI), and not
enough "hot" technology exists to drive growth in this sluggish
market.
IDC also said systems integrators are actively exploring new
ways to cut costs from delivery models in order to sustain
profitability. This includes using alternative delivery centres,
offering flexible pricing structures and building offshore
capabilities.
Building offshore capabilities will become a requirement in the
near term, which reflects how the SI business model is transforming
fundamentally, with integration services work continuing to be in
demand but becoming buried in larger outsourcing deals.
Westcott said that Canada is benefiting from this offshore trend
as US companies start to sign outsourcing agreements with Canadian
providers.