IT services spending to be $1700 billion by 2005

Worldwide IT services revenue is projected to reach $1100 billion in 2001, a 7% increase over 2000, according to Dataquest.

The industry is forecast to continue growing through 2005, when IT services revenue will reach $1700 billion. While poor economic conditions and the impact of heightened terrorism are expected to dampen growth to single digits through 2002 in many segments and regions, Gartner Dataquest believes overall demand will bounce back to double-digit growth from 2003 through 2005.

"Following 2002, increased confidence in the economy and business will present vendors with an opportunity to drive renewed demand among end users of IT services based on exploiting recent technology innovations," said Kathryn Hale, principal analyst for Gartner Dataquest's IT Services worldwide group. "Practical applications for mobile and wireless solutions, Web services, computer interface technologies, and communication convergence should prove to be critical."

Asia/Pacific is forecast to be the fastest-growing region with revenue projected to be $60 billion this year and increase to $115 billion in 2005.

Gartner Dataquest has identified two critical factors that most impact end-user spending for IT services: degree of decision-maker confidence and the pace at which vendors generate demand by implementing technology innovations. The second half of the 1990s, a boom time for the IT services marketplace, was a period of regular strides in technology. But with the rush to invest in ebusiness, vendor focus shifted away from exploiting technology to experimenting with business models. This shift in investment focus combined with a low point in product innovation left customers with fewer reasons to invest in IT during 2000, when the critical US economy began to decline.