COPENHAGEN, August 16, 2002 - The Western European professional services industry was badly affected by the worldwide economic slowdown in 2001. Western European professional services organizations (PSOs) reacted to the uncertainty about future profit expectations by slowing down their planned investments in professional services applications. IDC hasn't seen many signs of recovery in the market and does not expect the market to pick up again before first-half 2003. Market recovery will be based on an enhanced need for business applications automating the services supply chain and supporting the decision-making process.
According to a recent study from IDC, the Western European market for professional services applications reached $454 million in revenues in 2001, a growth of 11.9% from 2000 to 2001 - significantly lower than the 22.7% achieved the previous year. However, even though overall growth of the market is slower than expected, it grew much faster than the overall enterprise applications market for the same period.
IDC forecasts a 2001 to 2006 CAGR of 13.52% for the Western European professional services applications market, for a market revenue of $856 million by 2006. "IDC believes the Western European market for professional services applications will consolidate in the coming years, and the consolidation will be driven by the current economic uncertainty and the market entry by established enterprise applications vendors," said Lars Schwaner, Research Analyst with IDC's European Software Group. Germany is currently the largest market in Western Europe followed by the UK, France and the Netherlands.
"Professional services applications are playing an increasingly important role in project-based enterprises and organizations," said Schwaner. "As a result of the economic slowdown these types of companies are being forced to optimize business processes and performance."
Companies therefore need to:
· Get a clear overview of the project pipeline
· Match employees to the project that best utilizes their skills · Create a knowledge repository that stores/reuses information · Understand the profitability of projects, in order to execute projects on time and within budget The following drivers and inhibitors will affect market growth over the next five years:
Market Drivers
· Increasing demand from professional service organizations to manage projects and resources more efficiently and impact bottom-line revenue. · Increased demand for applications supporting collaboration with partners, suppliers and customers. These applications will enable professional services organizations to benefit from collaborative and workflow functionality as if all supply chain participants were part of the same project/organization.
Market Inhibitors
· The worldwide economic slowdown has impacted the entire services industry. · The xSP movement could depress revenue growth in the professional services applications market.
IDC's study, Western European Professional Services Applications Market Forecast and Analysis, 2002-2006 (IDC #LS27J), examines the professional services applications market in Western Europe. It provides detailed historical vendor revenues and market shares for 1999 to 2001, as well as market revenue forecasts for the overall professional services applications market for 2002 to 2006 in 16 Western European countries and on eight operating environments. It also contains a discussion of key market trends and growth opportunities for the Western European professional services applications market and its major players. The study is available for purchase from your local IDC office or www.idc.com.
About IDC
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For more information, contact:
Lotta Hallen-Kragh
+45 39 16 22 42
lhallen@idc.com