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Online marketplace services set to grow

Marketplace services spending will grow substantially during the next four years as companies look to integrate their systems with online exchanges, new research says.

    The marketplace services market will grow substantially as companies look to integrate their systems with online exchanges, new research says, despite the consolidation in the business-to-business sector.

    Research firm IDC said in a survey released Wednesday that marketplace services spending will increase at a compound annual growth rate of 27 percent, from $5.2 billion in 2000 to $17 billion in 2005.

    Consulting services companies like Deloitte Consulting, Lante and Accenture, formerly known as Andersen Consulting, offer services to marketplaces and marketplace participants and are positioning themselves to take advantage of the expected spending growth.

    IDC said it sees the focus in the industry shifting gradually from marketplaces to participants. More than 50 percent of the opportunity in the marketplace services market will come from participants, like suppliers and logistical support companies, by 2005, whereas nearly 85 percent of the revenue is now coming from the marketplaces themselves.

    "The demand for a full range of consulting, implementation and operation services has driven stunning growth for e-marketplace services," Leo Lipis, analyst at Framingham, Mass.-based IDC, said in a statement. "Moving forward, the greatest opportunities for marketplace service firms will be in integrating participants' internal systems with those of the marketplace."

    The growth in marketplace services spending in North America has reached its peak, according to IDC. However, other regions will compensate for this slowdown, IDC said. Western Europe and the Asia/Pacific region, for example, represent the greatest growth potential for marketplace services during the next four years.

    The business-to-business boom has also meant new opportunities for other service providers as well. A number of marketplaces, including Covisint, Elemica and ForestExpress, have tapped ASPs (application service providers) to host applications, or whole marketplaces, to free them from the high costs and labor necessary to manage software internally.