IDC’s Global Services Team Presents Top 10 Predictions for 2007: Services Leveraging New Delivery Models Are Key Growth Area

FRAMINGHAM, Mass., January 30, 2007 – As the model for services delivery continues to rapidly evolve, the market for IT and business services � whether labor-based, delivered through “software” or by online, hosted models � will clearly expand, presenting key opportunities, a recent IDC study reveals. These new models are dynamic, on-demand, scalable, and accessible. In 2007, those companies wishing to succeed must work harder than ever to maintain customer and employee loyalty, innovate continuously, and leverage technology and hosted models. IDC believes services firms must embrace in both word and deed the concepts of standardization, leveragability, and componentization for their own internal use as well as that of their customers. This a period where key investments will need to be made to ensure current and future competitive capabilities

“From consulting to outsourcing, customers have more choices than ever before, and we are at an extremely exciting time in our industry when delivery models actually enable the profitable delivery of enterprise-class services and functionality to a much broader range of customers,” said Rebecca Segal, vice president, Global Services Markets and Trends. “To succeed in 2007 and beyond, service firms must be increasingly creative to grow their businesses in a profitable way. Customers are taking advantage of newer and lower-cost solutions such as hosted applications that lessen the need for both hard-to-find internal resources and complex outsourcing agreements and encourage standardization.”

Offshore sourcing is completely mainstream and has branched into even greater numbers of business and IT markets, IDC’s research shows. These developments come at a time when the small and medium-sized business (SMB) markets in the developed nations, and perhaps more significantly in developing nations such as Asia, Africa, and Eastern Europe, are blossoming as massive consumers of technology and services.

IDC’s predictions for 2007 focus primarily on the leverage of new business models that have emerged and taken hold in the past few years � things like hosted applications, homeshoring, and greater productization of the services portfolio.

The top 10 predictions presented and analyzed in IDC’s study are:

  • While Battles Will Be Fought for the Megadeals in 2007 (Those Over $1 Billion), the War Will Be Waged for the Midsize ($50 Million to $500 Million) Deal
  • Acquisitions by Offshore Service Firms Will Accelerate as They Seek to Add Scale to Compete in the Outsourcing Business and Buy Greater Specialization and Industry Expertise to Address High-Value Consulting
  • Competition for the Midmarket Brass Ring Will Intensify as Key ISVs Oracle and SAP Focus on This Segment and Hosted Applications Make Enterprise-Class Performance Available to Smaller Companies
  • Service Productization Will Gain Traction as Service Firms Seek to Increase Profitability Through Standardization
  • SOA Adoption Will Accelerate as Companies Move Beyond the Pilot Stage and Advance to the Enterprise Level
  • Homeshoring, the Use of Home-Based Customer Care Agents to Field Customer Care Inquiries, Will Flourish as It Addresses the Need for Better Agent Quality, Lower Turnover, and the Seasonal Nature of Many Businesses
  • The Human Resources Market Will Consolidate as Large Firms Seek to Grow Their Client Base and Niche Players Broaden Their Portfolios
  • Enterprise Risk Will Drive Investment Across the Consulting Services Spectrum, with the Big 4 Firms Leveraging Their Expertise and Fueling Their Growth Engines
  • Network Complexity and Skills Shortage Will Combine to Heighten Opportunities for Network Infrastructure Consulting and Integration Services
  • Search Will Transform the Training Content Markets

This IDC study, Worldwide Services 2007 Top 10 Predictions: A Time for Business Model Change, (IDC #205267) identifies IDC’s Global Services research team’s top 10 predictions of the services marketplace for 2007. It highlights the major trends and critical developments that will impact the wide spectrum of the services industry, from business consulting to learning to talent management to IT and applications outsourcing. The predictions leverage the collective wisdom of over 70 IDC analysts tracking the services marketplace worldwide. www.idc.com.