Moderate Growth Expected In IT, Business Services Market

Apr 25, 2005 (10:04 AM EDT)

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Global spending on information technology and business services is expected to increase at a moderate pace over the next five years, a market research firm said Monday.

Companies and government are expected to spend $609.1 billion on external services this year, a 6.3 percent increase over 2004, International Data Corp. said. Spending is forecast to grow at a five-year compound annual growth rate of 7 percent to $803.9 billion in 2009.

Growth areas include horizontal business outsourcing, due to the trend toward consolidation in the industry, a decrease in the number of mega-deals, and a decrease in the average contract size, IDC said. In addition, project-based services are returning with moderate growth.

"In 2005, enterprise decision makers will continue to 'chunk' projects into smaller pieces with defined outcomes that tie directly into appreciable results," IDC analyst Sophie Mayo said in a statement.