Internet Spurs Growth, Drives Change in Services Industry

As companies scramble to incorporate Internet and e-commerce capabilities into their business strategies, the increased level of complexity they are looking for and the speed at which they need it are fuelling enormous opportunities for Internet service companies, says International Data Corp.

“No longer is relatively simple front-end Web development the project du jour. In its place is a more complex project involving creating e-commerce sites that need to be incorporated with back-end systems,” says Pooneh Fooladi, an analyst with IDC’s Internet Services research program. “The increased requirements of these projects are causing more companies to seek the assistance of outside service providers. This trend is creating huge opportunities for service firms to offer consulting, implementation and operations services in the Internet services market.”

According to IDC, the large demand is spawning more growth for the Internet service firm: a relatively new type of company with creative, technical, and strategic skills that are specifically targeting this opportunity.

“Service firms looking to increase their share in the Internet services market will need to create a business model with flexible service, pricing and delivery models, as well as ramp up their efforts to acquire personnel with a varied skill set so that they will be able to deliver end-to-end Internet services quickly,” Fooladi says.

In other IDC findings, researchers in IDC’s Consulting Services research program say on-line consulting has the potential to disrupt the services industry. According to IDC, on-line services are well suited for the changing market place, which demands agility, timeliness, efficiency and responsiveness. However, few consulting firms have stepped into the arena, leading IDC to warn that many are at risk of coming under a stealth attack.

“On-line consulting possesses the same characteristics as a disruptive technology and consequently has the potential of initiating a stealth attack on consulting services firms and their current business models,” says Marianne Hedin, manager of IDC’s Consulting Services research program.

“Consulting firms that have thrived with double-digit revenue growth throughout the 1990s can’t afford to be complacent about the Internet’s impact on their business. They can’t ignore the potential threat of on-line consulting,” Hedin warns. “The firms that continue to succeed will reengineer their business models and integrate offline with on-line consulting.”

Information about IDC research can be found at