The global supply chain management (SCM) IT services market will expand from $26.1bn (£16.3bn) in 2002 to $40.5bn in 2007, according to industry analyst predictions.
The sector will enjoy a five-year compound annual growth rate of 9.2 per cent after seeing scant activity last year, claims the IDC report, Worldwide and US Supply Chain Management IT Services Forecast and Analysis, 2003-2007.
Because of the economic downturn and geopolitical concerns in 2002, buyers were less receptive to large-scale SCM investments that required complex and lengthy implementations, claims the research.
Instead, corporates preferred to opt for smaller-scale projects that addressed pressing operational issues, with an upfront return on investment (ROI). IDC added that it expects this cautious approach to continue this year.
"2002 was a turbulent year for the worldwide SCM IT services market, but opportunities remain," said Romala Ravi, manager for supply chain and logistics services research at IDC.
"For today, unearthing these opportunities will require a laser focus on ROI and cost containment. Building strong and lasting relationships with clients will lay the groundwork for success further down the road."
As the sector picks up, IDC predicted, companies will begin to demand that their service providers help them create a larger, long-term framework to steer small-scale SCM initiatives towards more strategic goals.
Companies will begin to explore new areas, such as supplier relationship management, product life-cycle management and emerging technologies such as radio frequency identification devices.
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