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SYSTEMS INTEGRATION/OUTSOURCING MARKETS TO TRIPLE, PASS $100 BILLION BY 1999

 MOUNTAIN VIEW, Calif., Aug. 26 /PRNewswire/ -- Driven by corporate "downsizing" and rapidly evolving technology, the massive and rapidly growing U.S. markets for systems integration and outsourcing will more than triple from $32 billion in 1992 to $104 billion by 1999 at an 18.5 percent combined annual growth rate, projects a new report just released by Frost & Sullivan Market Intelligence.
 The breakdown between these two intertwined markets will remain relatively stable, with 60 percent of combined 1992 revenues coming from systems integration, including related equipment purchases, and 40 percent outsourcing, states the report, "Strategic Analysis of Systems Integration and Outsourcing Markets."
 Overall annual revenues growth is forecast to peak near 20 percent in the 1995-96 period. As corporations cut back they will need to become more efficient and make more effective use of information technologies. To achieve this they will increasingly use the consulting and re-engineering services of systems integrators.
 At the same time, as corporations downsize, they will reduce their own in-house technical staffs. But while their staffs will be reduced or eliminated, their work will not. This in turn will lead to more use of outsourcing.
 Customers are becoming less and less willing to take on the risks of capital investment in new technology. The successful systems integrator will increasingly have to show clients that proposed investments will produce rapid and visible paybacks such as faster customer response, cost reductions or shorter product development times.
 At the same time customers insist on prompt paybacks, they will also demand systems integrators share the risks of leading edge technology. Customers will buy results rather than technology.
 Technologies will continue moving toward the desktop and away from large mainframe and minicomputer systems. One resulting problem will be the need to integrate desktop systems with existing mainframe "legacy" systems. This will pose technical problems that will again help drive demand for systems integrators.
 The number of different technologies headed for the desktop will continue to proliferate. The number of choices is becoming too large for individual end-users to feel confident about making their own technical evaluations. They will increasingly depend on systems integrators to help them do so.
 Because there are so many different types of problems to be solved in this highly knowledge-dependent market, there is room for a large number of variegated competitors to survive. In order to succeed, each competitor has to carve our a defensible market niche. Providers differ in their market area and scale, size of customer they specialize in as well as size of project, the range of services they offer, and their depth of expertise in various areas.
 The largest systems integrators will depend less on federal, particularly defense, systems integration projects. They will increasingly need more specific vertical market expertise in a customer's particular business. They will also need to adapt internally to the move toward distributed data processing, which runs somewhat counter to their historical "strong suit" of expertise in large-scale mainframe computing systems.
 Frost & Sullivan Market Intelligence is an international high- technology research firm specializing in telecommunications and data communications. All Frost & Sullivan Market Intelligence reports are based on extensive interviews with marketing and technical experts from selected companies in each market segment. Primary research is validated by thorough analysis of available secondary research. Frost & Sullivan Market Intelligence is on of the leading publishers worldwide of high-technology market research reports.
 Systems Integration and Outsourcing Market:
 Revenue Forecasts (U.S.),
 1989-1999
 Revenue
 Revenues Growth Rate
 Year ($ Billion) (percent)
 1989 19.9 ---
 1990 23.1 16.6
 1991 27.1 17.0
 1992 31.8 17.5
 1993 37.5 18.2
 1994 44.7 18.9
 1995 53.5 19.6
 1996 63.9 19.5
 1997 75.9 18.9
 1998 89.6 18.1
 1999 104.4 18.5
 Compound Annual Growth Rate (1992-1999): 18.5
 NOTE: All figures are rounded. Source: Frost & Sullivan Market Intelligence.
 -0- 8/26/93
 /CONTACT: Amy Arnell of Frost & Sullivan Market Intelligence, 415-961-9000, or fax, 415-961-5042/


CO: Frost & Sullivan Market Intelligence ST: California IN: SU:

TB-LH -- SJ002 -- 6080 08/26/93 11:00 EDT
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