Services market to double in five years

The UK services market will reach £18.2 billion by 2003, with desktop management services, e-commerce and the euro being the main drivers of growth.

A recent study from research firm IDC, entitled UK IT Services Industry: Markets and Trends 1998-2003, has valued the UK IT services market at £9.7 billion in 1998. Global players dominated the local services market, with BT and Sema Group the only UK-based vendors to crack the top 10.

EDS extended its market leadership with an 11.9 per cent share, compared with IBM Global Services at 10.7 per cent.

However, Marianne Kolding, research manager at IDC and author of the report, claimed: 'IBM has a lot of momentum at the moment and it has the potential to take over from EDS this year.'

She added: 'Hewlett Packard or Unisys could also potentially move into the top 10. Logica and CMG are too small to do anything over the next 12 months, although there's no reason why they couldn't do so in the longer term.'

Processing services and IS outsourcing were the highest revenue service categories in 1998, but desktop outsourcing, network management services and packaged software support and integration are projected to record the largest compound annual growth rates (CAGR) over the next five years.

Kolding said e-commerce and euro compliance will be IT spending priorities over the next year.

But she added: 'Companies will still spend a lot on the millennium issue in 2000 because many are focusing on making their mission-critical systems compliant by the end of this year and will leave non-critical systems until next year.'

The report also quoted research from Regent Associates, indicating significant consolidation in the UK channel. More than 50 per cent of the 193 mergers and acquisitions in the UK services market during 1998 involved systems integrators and Vars.

UK SERVICES TOP TEN 1998

1 EDS

2 IBM

3 ICL

4 Andersen Consulting

5 BT

6 Cap Gemini

7 CSC

8 Sema Group

9 Bull

10 Compaq/Digital.