Gartner Dataquest Says Australian IT Services Revenue to Increase to $11.9 Billion in 2002

Sydney Australia, August 21, 2002 — The Australian IT services industry is on track to reach $11.9 billion in 2002, a 8.9 percent increase from 2001, according to Dataquest Inc., a unit of Gartner, Inc. (NYSE: IT and ITB). Australian IT services revenue is projected to grow 10 percent in 2003, with revenue of $13.2 billion, and increase to $14.7 billion in 2004. By 2005, IT services in Australia will total $16.7 billion. "During the global economic downturn, many companies' business focus shifted from revenue-generation to cost reduction. In the IT services market, this led to a shift from investing in new products to optimization of established IT infrastructures," said Min Joo Chon, analyst for Gartner Dataquest's IT Services group. "The optimization focus helps the IT services market to move forward for the services provision of initiatives such as e-business, ERP and CRM." Professional services account for the majority of the Australian IT services market, with business process and transaction management (BPTM) being the fastest growing segment. BPTM is forecast to grow from $3.7 billion in 2001 to $6.0 billion by 2005. "Given the competitive business environment, companies around the globe are focusing on their core business processes, causing them to outsource their noncore business processes, particularly back-office functions," said Chon. "In industries such as financial services, utility and telecommunications, a shift in regulatory environment is leading enterprises to achieve even higher cost efficiencies in operational management and to focus on their front-end processes." Consulting has been the segment most adversely impacted by the slowdown in the Australian economy. The market posted negative growth in 2001 and is expected to grow 1.5 percent in 2002. Organizations demanded bundling of services under outsourcing engagements, rather than engaging in separate consulting assignments. Although growth was slow in the first quarter of 2002, it began to take off with the recovering economy. Because the Australian economy is relatively strong and the Australian IT services market is sophisticated, Gartner Dataquest predicts consulting services in Australia will recover after 2002. "Service providers and their customers must develop strong working relationships for these challenging times. The business environment forces vendors to take a proactive approach to customers," Chon said. "In this new economic reality, service providers who can work with customers to optimize service costs and reduce discretionary costs are most likely to survive the looming industry shakeout." Additional analysis is available in the Gartner Dataquest Focus Report "Australia: 2001 IT Services Overview." This report examines how the various sectors in IT services will evolve through 2005. Gartner analysts will provide further analysis on the state of the hardware industry during Gartner Symposium/ITxpo 2002, November 12-15 in Sydney, Australia. Gartner Symposium/ITxpo is the IT industry's largest and most strategic conference, providing business leaders with a look at the future of IT. Attendees are responsible for more than $35 billion in IT spending for their respective companies, and rely on Gartner Symposium/ITxpo to gain insight into how their organizations can use technology to address business challenges and improve operational efficiency. For more information or to register for Gartner Symposium/ITxpo 2002, please go to www.gartner.com/symposium/us. Members of the press may contact Gillian Paton at 61 2 9459 4782 or at gillian.paton@gartner.com to register for Gartner Symposium/ITxpo 2002. Gartner Dataquest is the recognized leader in providing the high-technology and financial communities with market intelligence for the semiconductor, computer systems and peripherals, communications, document management, software, and services sectors of the global information technology industry.