Consulting Services Market Transformation Is Far From Complete, IDC Finds.

FRAMINGHAM, Mass. -- According to a newly released IDC study, the global consulting markets are undergoing a phase of uncertainty and business model redefinition, as changes in buyer behavior drive shifts in the competitive landscape and vendor positioning. Despite the evolving market dynamics, worldwide consulting spending is expected to increase from nearly $47.9 billion in 2004 to $57.5 billion in 2009, at a five-year compound annual growth rate (CAGR) of 3.7%.

"In an environment of declining IT budgets, technology simplification and standardization, skepticism around consultants' value proposition, increased interest in business process outsourcing, and advancement of the global labor sourcing model, IT and business consulting services vendors are reinventing the way they market, sell, deliver, and make profits on consulting services business," said Anna Danilenko, program manager for Consulting Services research at IDC.

While this study finds that overall consulting spending in 2004 fluctuated between a flat trend and a slight increase, the market has several pockets of growth including emerging technologies, regulatory compliance, infrastructure and dynamic IT. In addition, although consulting spending is stagnant, the number of consulting projects signed and delivered is increasing, which is indicative of the trend towards smaller projects and more aggressively priced services.

Key trends in the business and IT consulting services market explored in this study include:

--Selling consulting services as part of outsourcing engagements

--The growing number of outsourcing engagements, primarily in the BPO space that now include high-value consulting services

--How consulting vendors' have increasingly begun to focus on building and enhancing their healthcare and government practices

--There is no clear buyer understanding of the short-term tangible value of transformational consulting services

From a regional perspective, the Americas represent the largest market for business consulting services, while Europe, the Middle East, and Africa (EMEA) hosts the fastest-growing IT and business consulting opportunity. The EMEA region is expected to surpass the Americas in 2007 in terms of IT consulting services spending, though the Americas will remain significantly higher with regards to business consulting services spending.

The IDC study, Worldwide Consulting Services 2005-2009 Forecast: Redefining the Business Model and Setting a New Course (IDC #33445), presents IDC's predictions and assumptions relating to the 2004 market forces affecting the business and IT consulting services markets. Also provided are key buyer and vendor trends that will impact global and U.S. consulting spending during the 2005-2009 forecast period. The study also presents global business and IT consulting services spending by region and market segment, and offers essential guidance for consulting vendors.

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IDC is the premier global market intelligence and advisory firm in the information technology and telecommunications industries. We analyze and predict technology trends so that our clients can make strategic, fact-based decisions on IT purchases and business strategy. Over 700 IDC analysts in 50 countries provide local expertise and insights on technology markets. Business executives and IT managers have relied for 40 years on our advice to make decisions that contribute to the success of their organizations.

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