Growth Slowing in Services Market

November 27 2008: IDC has confirmed that the services market is slowing around the world, with a new study showing that spending on services will grow 5.2 percent year over year in 2009 – a drop of 1.5 percent from its previous forecast.

The effects of the economic crisis appear to be taking root, as beyond 2009 IDC also estimates slower growth, with the years through 2012 all expected to deliver less than predicted. Its not all bad news though, as IDC notes there have been worse dips in growth.

“Services spending will not contract as it did in the previous economic downturn, however the effects of the current economic crisis will reduce spending growth in the services market across the entire forecast period,” said Gard Little, research manager, Worldwide Services and Emerging Services Opportunities research.

The study also highlights changes in worldwide services spending growth rates by macromarket, including:

• Project-oriented: Growth rates are forecast to slow to less than 3 percent in 2009, but then increase by the end of the forecast period.
• Outsourcing: The business process outsourcing services market is the largest portion of the services market overall and will be the major driver in growth rate changes. Even with the decrease in growth rate for the hosted application management market, it still remains the fastest-growing market opportunity.
• Support and training: Growth rates are forecast to remain below 3percent for the remainder of the forecast period. Smaller spending increases are expected in both the hardware and software deployment and support markets.

Titled “Worldwide Services 2008–2012 Forecast Update”, the study presents an updated five-year forecast for the worldwide services industry from 2008 through 2012. IDC says that the purpose of this update is to identify new trends or changes in assumptions that are influencing worldwide service opportunities and discuss their effects on the worldwide services five-year forecast.

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