Heightened expectations spark growth in CRM services

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The CRM services markets is one of the hottest in the IT industry. Worldwide revenues will grow from $34.4 billion in 1999 to $125.2 billion in 2004. According to IDC, this is more than twice as fast as the expected increase in the overall IT services market. Customers’ elevated expectations and the impact of ebusiness are major factors in the growth of CRM services.

“Without a doubt, the growth of ebusiness is the most important factor impacting the CRM services market,” said Katrina Menzigian, program manager for IDC. “eBusiness has not only changed how companies conduct business, but also how they interact with their customers. In addition to creating new communication channels and alternative interaction options for consumers, ebusiness has changed the rules and expectations, fundamentally altering the consumer experience.”

With customers’ expecting a higher degree of service, those companies that can provide it have the competitive advantage.

“As one credit card or airline increasingly resembles another, consumers will ultimately spend their money with the vendor that provides them with a satisfying consumer experience. Customer service is elevated to the role of a critical market differentiator in both the online and offline worlds,” Menzigian said.

Within the CRM services market, outsourcing/operations management is the most frequent activity. This segment generated 67% of the market’s revenues in 1999, but its share will decrease to 60% in 2004. At the same time, CRM implementation services will increase its share from 19% to 25%.

“As more midsize firms begin investing in CRM solutions, they will choose to implement these solutions in their own environments instead of outsourcing them,” Menzigian said. “Two factors will contribute to this trend: the introduction of CRM consulting and implementation services targeting midmarket firms, and the continued focus on large companies by the outsourcing industry.”

IDC’s new report, Worldwide CRM Services Market Forecast and Analysis, 1999-2004, includes revenue forecasts through 2004 segmented by service activity, geographic region, industry, and CRM segment. The report also looks at major trends shaping the market as well as trends among service firms.



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