The amount of money organisations spend on IT will increase at an 11.7 per cent compound annual growth rate (CAGR) from $1.06 trillion in 1998 to $1.84 trillion in 2003, with services being the largest single drain on budgets.
In 1998, users spent 24.1 per cent of their total cash on professional services, with support services making up another 11.2 per cent, but by 2003, this will have risen to 29.9 per cent and 9.4 per cent respectively, according to Mark Hodges, Dataquest's vice president and worldwide director at the market research firm's Servicetrends 99 conference in San Francisco this week.
"The amount of spend on services just keeps growing despite recessions and the like. This is a function of both the escalation in salaries that makes it difficult for customers to retain key IT staff as well as the effect of Moore's Law on the hardware markets," he said.
The fastest growing segment of the services market will be professional services, he continued, which will grow at a 17.5 per cent compound rate to $553 billion by 2003 from $247 billion in 1998. But business management services as a subset of this will outstrip growth elsewhere, showing a CAGR of 20.4 per cent, as customers up the rate at which they outsource their business processes.
Software maintenance and support will show the next highest levels of growth, increasing in value to $49 billion by 2003 from $24 billion in 1998 at a CAGR of 15.7 per cent.
But hardware maintenance and support, which is largely a mature market, will grow at only 5.6 per cent to $119 billion by 2003 from $91 billion in 1998. The fastest growing segment here will be networking equipment, growing at 7.4 per cent to $27 billion in 2003.
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