The Roundup: The E-Commerce Hokey Pokey

The Roundup this week looks at what the next five years will hold for the two most hotly debated strategic IT issues since Y2K: outsourcing and e-commerce.
IS Outsourcing On Hot Streak
If your company is making a shift toward outsourcing IS functions, it's not alone. A new report from International Data Group says spending on outsourcing will nearly double in the next several years.

IDC says spending on IS outsourcing will grow from $56 billion in 2000 to more than $100 billion by 2005, as companies find ways to lower costs and remain competitive.

U.S. companies will be the biggest outsourcing spenders, accounting for 44 percent of spending in 2005. What's being outsourced? Everything from data center operations, desktop management, LAN/WAN management, application development, and maintenance, among other services.

Western Europe is the second-biggest spender, with spending expected to grow from $16 billion in 2000 to more than $26 billion in 2005.

IDC says several reasons beyond cutting costs are driving companies to outsource IS, including keeping up with new technology, focusing on core competencies, building partnerships, and creating value for the business.

E-Commerce's Death Greatly Exaggerated?
Say this for e-commerce analysts: Even in the face a drastic industry shakeout, they're managing to make the future sound less than dire. Take, for example, the latest forecast for online sales from Jupiter Media Metrix.

The analyst firm said this week that U.S. online retail sales will reach $104 billion in 2005 -- more than three times the $34 billion in sales expected in 2001. And for 2006 the prediction swells to $130 billion. Those numbers aren't far off its earlier predictions of $36 billion in 2001 and $118 billion in 2005.

Jupiter analyst Heather Dougherty says, "While short-term market factors have slowed the pace and shifted the playing field toward multichannel retailers, the long-term outlook is still positive. Retailers and their constituents must not lose sight of the fact that the online purchasing population continues to grow and their comfort with the channel continues to increase."

Jupiter predicts that 52 percent of the online population will be making retail purchases online by 2002, and 63 percent by 2006, up from 40 percent in 2000.

What's being sold online? Jupiter says the top 10 are travel services, with $1.03 billion in estimated online monthly revenue, clothing ($367 million), auction items ($335 million), computer equipment ($253 million), books ($204 million), electronics ($111 million), software ($100 million), health and beauty items ($82 million), and home and garden products($77 million).

Online English Language Use Declining
The English language, the dominant language on the Web, is fading as the number of Web users in non-English speaking areas of the world grows and businesses adjust to target those users, according to Aberdeen Group.

The IT research firm says businesses are increasingly turning to a global strategy for their Web sites, offering localized, customized content in local languages, rather than English-only sites for a global customer base.

By 2004, 80 percent of business-to-business companies will globalize their Web sites as they expand to tap new markets, Aberdeen says.

New Web users in Latin America, the Middle East, and Asia/Pacific are putting U.S.-based, English speaking Web users in the minority, Aberdeen says. At the end of 2000, fewer than 35 percent of all Web users were U.S. citizens and only 48 percent of all Web users spoke English.

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