IDC sizes Canadian xSP market as a $9.3 billion opportunity

An IDC study released early this year estimates that spending in Canada on a wide range of IT service providers, (xSP where ‘x’ means whatever IT activity might be imagined), is at C$9.3 billion in 2001 and will grow at a 17.9 per cent compound annual growth rate (CAGR) between 2000 and 2005.

Billed as the first xSP Canadian market quantification study, X Marks the Spot forecasts that the xSP worldwide market is expected to increase from US$106 billion in 2000 to more than US$392 billion by 2005, with a CAGR of 30 per cent.

“The notion of xSP … is emerging in 2002 among the most revolutionary and important IT service opportunities seen in many years,” reports Lars Goransson, IDC Canada’s vice president of services programs in the company’s news release.

“The idea of xSP is less about introducing a set of brand new IT services than it is about redefining how IT/communications, infrastructure, IT applications and business processes might be packaged, sold and deliver to a wide range of customer segments. This is significantly different from traditional outsourcing, which is a tailored and customized IT service offering.”

With today’s computing environments demanding higher levels of reliability, availability and performance, the business computing customer seeks greater choice, variety and specialization in the IT services they purchase, the release notes. IDC predicts the xSP model may be the most compelling answer to these needs, as not only large companies, but smaller and mid-size organizations, are challenged to build and support IT infrastructures and application processes, often beyond their own capabilities.

The study highlights opportunities for xSP market segments such as network service provider (NSPs); system infrastructure service providers (SISPs); application service providers (ASPs); content service providers (CSPs); and business service providers (BSPs).

IDC describes it as an evolutionary model from which providers can base strategic decisions concerning whole product, go-to-market and expansionist strategies.

While still in a formative stage within Canada, xSP services in the United States and other regions have emerged to address various needs within corporate, government, education, and nonprofit markets and even within the home, reports IDC.

IDC believes the xSP approach will be embraced by a wide range of Canadian business customers who will adopt this model as new services become available and wide acceptance of the model’s viability becomes reality.

“The greatest inhibitor to the success of the xSP market in Canada is the need to educate business customers to both the concept and value of xSPs,” the release attributes to Goransson.