Web Builder Bonanza - IDC report on Internet professional services spending - Industry Trend or Event - Statistical Data Included

Industry Standard, The, July 23, 2001 by Kathi Black

DOWNTURN BE DAMNED. SPENDING ON INTERNET PROFESSIONAL SERVICES WILL MORE THAN DOUBLE BY 2005.

Consultants used to be able to practically mint money by showing companies how to cope with that newfangled thing called the Internet. Now the Internet isn't so new, and the dead and dying litter the so-called Web services landscape. Whether it's March-First, Organic, Razorfish, Sapient, Scient or Viant, almost every major player in the Internet services sector has disappeared, filed for bankruptcy or, at best, weathered waves of layoffs and cutbacks.

But hold on! A new report from research firm IDC bravely predicts that the Internet services market will not only survive but will in fact practically explode, from $22 billion in sales last year to a healthy $68 billion in 2005.

Sure, IDC admits, things could be better. Last year, the research firm had anticipated that the total Internet services market would reach a whopping $99 billion by 2004. This year, it dialed back that forecast by almost half. Still, that's a lot of cake for such a troubled sector.

"This market is not dead, but it's really changing," says IDO senior analyst Pooneh Fooladi. Much of the growth will come not from dot-coms, Fooladi says, but from large corporations as they make the transition from small-time departmental projects to companywide and worldwide strategic initiatives. That sort of big-picture stuff is hard work, and IDC assumes that consultants will be in high demand to help on those projects.

Moreover, technology -- especially the mobile kind -- is still evolving at a rapid clip. IDC predicts that worldwide spending on mobile e-commerce projects will jump from $1.4 billion in 2000 to $40 billion in 2005. Right now, such spending is fairly insignificant in the United States. But in Western Europe -- which is generally more advanced in mobile e-commerce implementation -- growth is already happening. IDC predicts the United States will overtake Western Europe by 2005, when it will account for 40 percent of the global market. Mobile e-commerce may or may not be a bust, but telling people how to do it may prove to be a growth business.

Finance, Manufacturing Will Spend Most
U.S. Internet Services Spending by Industry
In Millions.
                     2001    2005
     Manufacturing  $2,724  $6,881
Financial Services  $2,978  $6,662
 Media, publishing  $1,739  $3,874
 Retail, wholesale  $1,635  $3,719
        Government    $889  $2,200
 Business services    $915  $1,859
       Health care    $549  $1,612
         Utilities    $641  $1,581
    Transportation    $458  $1,209
         Education    $235    $620
      Construction    $118    $310
             Other    $196    $465
Source: IDC, June 2001
Note: Table made from bar graph
In millions.
                 1997     1999     2001     2003     2005
United States   $2,912   $8,758  $13,078  $21,882  $30,990
Western Europe    $826   $4,295   $8,600  $13,530  $22,330
Japan             $326   $1,073   $1,998   $3,481   $5,416
Asia-Pacific *    $274     $859   $1,527   $2,697   $3,384
Latin America      N/A     $402     $890   $2,066   $3,039
Rest of world     $226     $788   $1,403   $2,446   $3,117
Worldwide       $4,564  $16,174  $27,495  $46,102  $68,276
(*)Excluding Japan.
Source: IDC, June 2001

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