Software Services Opportunities Growing

The market for information technology (IT) and business services continues to present major opportunities, according to a recent study by IDC, a market research firm headquartered in Framingham, MA.

The study reveals that the overall market is growing because many businesses are feeling pressure to expand geographically, meet greater productivity expectations, develop deeper business and industry expertise, find ways to sell their intellectual capital and make internal transformations to meet business goals. Much of this growth is taking place inside small to medium businesses (SMBs), a relatively new market that presents challenges different from those encountered with large enterprises.

In general, SMBs aren’t willing to spend as much as large enterprises, which creates opportunities for smaller IT services firms that are more responsive than their larger counterparts. SMBs often have higher expectations about what they want to accomplish, however, which could open the door for larger vendors that can offer complete solutions.

Because of this, the services market is highly volatile. It is also fragmented, with the top 20 providers responsible for a little more than a third of worldwide services revenue. At the same time, many of the new companies entering the IT services market are focusing on vertical industries and specialized functions. Because of this, IDC believes that competition for IT services dollars will continue to be stiff.

Competition in the services marketplace has never been so intense, according to Sophie Mayo, IDC’s director of worldwide services research. “With new entrants from offshore locations, new delivery models, the convergence of software, hardware, and services, and ever more demanding customers, services firms are faced with a multitude of challenges,” she says, “Those firms that are able to anticipate the changes and execute on their vision will stay on the top of the market.”

According to IDC, firms that can demonstrate their ability to integrate technology, data and business processes with an explicit measurement of cost savings and value creation will be the ones that will win IT services revenues in the future.