Service providers ignoring smaller companies: IDC

The xSP market in Canada is expected to grow by leaps and bounds until 2005 – too bad nearly 70 per cent of companies don’t even know what an xSP is.

IDC Canada presented its findings Wednesday from a recent research paper, entitled The xSP Market: Canadian Dynamics with Global Impact, during a conference call on Wednesday.

The xSP concept relates to a variety of outsourcing options such as application service providers (ASP), managed security software providers (MSSP), business service providers (BSP) and wireless application service providers (WASP).

The premise is that vendors will move toward bundling solutions that they in turn will sell as a service. “With the xSP model users get a choice in outsourcing services. (It’s) a means of offering standardized services for customers who don’t need customized engagements,” said Jason Bremner, senior analyst outsourcing and IT utility services for IDC Canada in Toronto.

In 2001, the market generated $9.3 billion and IDC projects that the ASP market will grow by 90 per cent annually until 2005. It is a large market that is still in its infancy, Bremner said. Part of the reason is because vendors have not pursued the small- and medium-size companies, focusing instead on large enterprises. The key to this new business-outsourcing model is offering those SMBs an affordable offering that they can adopt. “In Canada, outsourcing is only addressing one per cent of the market, only the very largest of companies. There are no real alternatives for small- and medium-size businesses,” he said.

The telecommunications (telco) sector has long aligned itself with the notion of offering bundled services, working both independently and jointly with specific vendors to provide services. And according to one industry analyst, the telcos have actively pursued all profitable markets.

“Look at how aggressively Bell (Canada) is in going after the SMBs, very aggressive,” said Brownlee Thomas, research director for Giga Information Group in Montreal. She said telcos in the managed services space are responsible for managing virtual private networks (VPN) over the public Internet.

Thomas said the notion that SMBs are not being addressed is not a revolutionary argument – they have been crying for years for improved services. And, if the market has been undeveloped in this country, it is directed related to vendor’s not taking it quite as seriously. “These specialists have not been jumping into Canada. They’ve been so busy building marketshares in the U.S. and the U.K. that Canada was a little incidental to them, ” she said.

IDC Canada in Toronto can be reached at

Giga Information Group in Cambridge, Mass., can be reached at