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GARTNER DATAQUEST FORECASTS WORLDWIDE IT SERVICES SPENDING TO BE $1.4 TRILLION BY 2005.

Despite concerns about the economy and the struggles among dot-com companies, the worldwide IT services market is projected to grow from $665,870 billion in 2000 to $1.4 trillion in 2005, according to Dataquest Inc., a unit of Gartner, Inc. (NYSE: IT and ITB). The worldwide IT services industry grew 9.7 percent in 2000, and the market is forecast to increase 12.5 percent in 2001. Gartner Dataquest analysts will provide comprehensive analysis on the IT services industry during its ServiceTrends 2001 conference to be held May 21-23 in San Francisco.

In 2000, North America IT services revenue reached $345 billion, which represented 52 percent of the market. By 2005, the North America region will have revenue of $712 billion and will still account for 52 percent of the overall services market. Despite concerns about a slowing economy, there are still a lot of growth opportunities for the industry long term.

"In periods of economic contraction, the IT services market has benefited from the need for organizations to increase productivity and re-engineer their processes," said Michael Palma, principal analyst for Gartner Dataquest's IT services worldwide group. "Product support services will also continue to be a driving force in the IT services market because mission-critical functions and a complex technology environment will continue to require expenditure by end-users to support their infrastructure and assets."

Western Europe was the No. 2 region in 2000 with IT services revenue of $172.8 billion, and the market is on pace to reach $326 billion in 2005.

"We still see many of the traditional drivers influencing the Western European IT services market, including a constrained supply of labor and the outsourcing of noncore activities," said Robert De Souza, industry analyst for Gartner Dataquest's IT services Europe group.

Gartner Dataquest analysts said the Asia/Pacific region is forecast to have the strongest growth rate. The IT services market in Asia/Pacific is expected to grow from $37.7 billion in 2000 to $124.8 billion in 2005.

"The Asia/Pacific IT services market is expected to enjoy robust growth with the increase of government-funded IT projects in many countries. Public spending will continue to be the main engine of growth in the region," said Angelia Kho, industry analyst for Gartner Dataquest's IT services Asia/Pacific group. "Deregulation, consolidation, and mergers and acquisition in key industries such as banking and telecommunications in some major countries are expected to have a positive effect on the market."

Development and integration has been the largest segment within the IT services industry, and this will continue through 2005. In 2000, the development and integration segment reached $169.4 billion, and in 2005, the market is expected to be $368.9 billion. Business process management (BPM) services was the No. 2 segment in 2000, and it's projected to have the strongest growth rate in the IT services market. BPM services in 2000 were $148.2 billion, and in 2005, it will total $345.5 billion.
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Title Annotation:Industry Trend or Event
Comment:GARTNER DATAQUEST FORECASTS WORLDWIDE IT SERVICES SPENDING TO BE $1.4 TRILLION BY 2005.(Industry Trend or Event)
Publication:EDP Weekly's IT Monitor
Geographic Code:1USA
Date:May 7, 2001
Words:495
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