Worldwide xSP Market and Forecast by Region, 2000-2005

Although many eyes are on the poor state of the technology markets in the United States, interest in the xSP model continues to grow throughout the world. For many countries, this is a new and intriguing market. For others, the interest and the growth are more reserved. However, regardless of a country's current focus on or interest in xSPs, the vast majority will adopt this model as new services become available and wide acceptance of the model's viability becomes reality.

The xSP market (specifically services that are externally managed, provide a one-to-many service, and are service-fee priced delivered over a network) includes a wide and growing range of services for businesses and consumers. This market for xSP offerings will grow from $106 billion in 2000 to more than $392 billion by 2005, with a combined annual growth rate of 30%. xSP revenue estimates in each region for 2000 through 2005 are included in this document. The United States continues to dominate in terms of xSP revenue, accounting for just over 41% of the worldwide market. Although the United States remains dominant through 2005, its share of revenue slips to 34% over that time.

Over the next five years, convergence and partnering will represent some of the greatest activity in this market as the service providers -- both emerging and established -- seek the sweet spots for new revenue or margins. In addition, the consumer faith in the xSP model as a viable outsourcing solution will grow as the xSPs refine their techniques of providing the best options to the clients while maintaining the economy of scale that the one-to-many xSP model provides for their customers. In the short term, the economic slowdown will affect the xSP revenue in a positive manner.

Potential xSP clients will be looking to save on capital expenditures or outsource business pieces that are not their core competencies, or they are simply frustrated from trying to find and keep skilled IT resources and, therefore, are searching for xSP solutions, even if they will only be used on a trial basis. From a regional perspective, the United States remains the largest market in the industry. However, Western Europe and Asia/Pacific follow closely at $99 billion and $85 billion, respectively.

The rest of the world (ROW) section (containing Eastern Europe, the Middle East, and Africa) has the most rapid growth of all the regions, with a 42% CAGR, while Asia/Pacific, including Japan, has the next greatest growth, with a 37% CAGR. IDC estimates that since the dot-com hype dissipated, high-tech companies such as xSPs and others are seriously focusing on profitability and the partnerships leading to profitability. This blossoming interest in using profitability as a measure of business success will support and validate the xSP industry and encourage growth within the industry and acceptance from customers.

IDC's new report Worldwide xSP Market and Forecast by Region, 2000-2005 (IDC #25457) looks at the current size of the xSP market and provides regional revenue forecasts through 2005. This report provides detailed analysis in the following regions: Asia/Pacific, Canada, Latin America, the United States, Western Europe, and the rest of the world. More than 12 analysts with country- and regional-specific expertise collaborated to provide the specific regional xSP viewpoints. Included within the report are individual overviews of the drivers and inhibitors for growth in each segment. To purchase this report, contact Katja Schmalen at 069/90502-115 or at kschmalen@idc.com.