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| European IT Services Market to Reach $243 Billion by 2012, Driven by Strong Growth in Outsourcing, Says IDC According to a recent IDC study, the Western European IT services market performed better than expected in 2007, reaching a value of $192.3 billion and growing at 6.4% in constant currency. Due to the current uncertain economic situation, however, IDC is now taking a more conservative view of the market, with growth forecast at 4.8% CAGR throughout the forecast period to reach $242.8 billion by 2012. "As the European economy cools down, the outsourcing segment continues to be the growth engine of the IT services market", said Laura Converso, research manager, IDC's European Services Research. "The overall outsourcing market will exceed the size of project-based services by 2008 and will account for 42% of the total IT services market by 2012. At a worldwide level, IDC estimates that Western Europe will eclipse the U.S. to become the largest geographic market for IS outsourcing by 2009." Demand for IT services will slow down in 2008. At a total Western European level, IDC expects a 1.8% drop in spending growth compared to 2007, bringing total growth to 4.6%. IDC believes the credit crunch will not have as strong an influence in Europe as it did in the U.S., but the uncertainty will lead to fewer new contract signings. Among the top 5 European economies, IDC expects France, Italy, and the U.K. to grow below the Western European average, while growth in Germany and Spain will exceed the European average. The crisis will probably be felt most strongly in project services and less so in support services, with little or no impact in the outsourcing segment. As the project services segment will represent around 38% of the total market in 2008, the final impact on the overall services market cannot be ignored. During 2008, the alignment of IT with business needs will be a priority for companies in search of business flexibility and agility. However, many European enterprises will focus more on process efficiency and cost reduction than on top-line growth, and they will demand innovation from their suppliers to help them on their cost-reduction crusade. IDC believes demand for innovation will increase in order to support business development. Innovation will be key, particularly in the outsourcing space, and will influence buyers' decisions as they enter the renewal phase and decide whether to stick to their existing supplier or switch to another services provider. The overall outsourcing market will remain the fastest-growing segment, with 7.5% growth forecast for 2008. Outsourcing for cost-cutting reasons is likely to be an area of growth in 2008 to 2009 if enterprises begin to experience economic problems. The market is expected to grow at a CAGR of 7% throughout the forecast period. The study, Western European IT Services Market 2007 and Forecast 2008-2012, analyzes IT services trends among Western European companies between 2007 and 2012 with a focus on the following services macro-markets: project-based services, outsourcing, and support services. The study presents a quantitative analysis of IT services spending by services foundation markets and country, and includes a qualitative analysis focusing on the key assumptions that IDC believes will shape demand for IT services in the forecast period. write your comments about the article :: © 2008 Computing News :: home page |