Service market set to rocket

Global spending on external services will reach $633bn in 2006, representing a growth rate of 6.8 per cent from 2005, according to analyst firm IDC.

Its Worldwide Services 2006-2010 Forecast report also concluded that the global spend on services will increase at a five-year compound annual growth rate of 6.9 per cent between 2006 and 2010. This means the sector will be worth $866bn by 2010.

Sophie Mayo, director for worldwide services at IDC, said: “The most significant examples [of impacts on the services industry] include the globalisation of services delivery, standardisation in the software industry and new technologies that drive the automation of services in the consumption and internal delivery processes.”

IDC recommended that players in the services space try to attract and retain talent, understand service oriented architecture, because vendors will be making this key, and help clients to both insource and outsource technology functions.

IDC’s report also discovered that outsourcing, particularly business outsourcing and application management services, will continue to fuel the global services industry, with the US and central Europe leading the growth.

Gordon Davies, chief executive of services VAR Compusys Consulting, agreed that services offers good margin potential for the channel.

“The opportunity for the average services channel player is very strong in the SME market, because they have more agility and speed of response [to end-users] in that sector than the larger multinationals have,” he said.

Julian Lewis, managing director of services VAR Positive Computing, said: “I would agree that services are an area of growth for channel partners. Areas such as automation are already a sector that we are getting involved in.”