A CRM Growth Spurt in 2006?

Following another year or two of sluggish growth, the CRM market will begin to grow significantly after 2005, according to a new report from research firm IDC called "Worldwide and U.S. CRM Services Forecast and Analysis, 2002--2007." As the current economic climate continues to restrain growth in the near term, new IDC research forecasts that combined worldwide CRM and customer care services revenue will reach $101 billion in 2007, with a 2002 to 2007 compound annual growth rate of 11.3 percent. According to another IDC report, "Worldwide and U.S. Customer Care Services Forecast and Analysis," customer care services (primarily the call center market) has been inhibited by longer sales cycles and extreme pricing pressure, yet driven by profound new interest in business process outsourcing (BPO) and offshore outsourcing. IDC expects customer care services to experience a fair amount of turbulence over the next 12 to 18 months. To successfully compete in this complex marketplace, IDC advises providers of CRM and customer care BPO services to make cost savings a priority, stress performance as the measure of success, and focus on delivering value to clients, according to Brian Bingham, program manager for CRM and customer care services research at IDC and the author of both reports. In the CRM services sector the most successful firms will be the ones that can provide a favorable suite of services that address business process reengineering, redesign, and optimization, Bingham says. More specifically, IDC's report reveals that CRM operations (operations management activities and IT--related outsourcing, excluding contact center outsourcing) is the area most likely to provide growth opportunity in the United States over the next five years. "Despite the current economic climate, opportunities remain within the CRM and customer care services marketplaces," Bingham says. "Being attuned to cost containment, ROI, and business process optimization, however, must be the mantra if service providers plan to survive and thrive." Bingham admits that the combined growth rate of 11.3 percent may seem slight when compared with growth rates of nearly 20 percent a few years ago, but he says many factors make this a promising projection. "This is still fairly strong growth when compared to other markets that are expecting to see flat or negative growth over the next few years," he says.
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