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February 15, 1999


By CBR Staff Writer

System support is still one of the largest IT services market and one of the most strategically important in Europe, despite being one of the least profitable, according to a new report from International Data Corp. Gross profit margins are continuing to decline in the sector, and IDC says the only way to halt the decline is increased operational efficiencies. Those who enjoy the highest margins are the companies focusing on supporting their own product lines, who can, to some extent, set their own prices. Companies supporting third party products face the tightest squeeze, particularly in the desktop space. Subcontracting low margin activities, minimizing stock, automating support processes and generating economies of scale are all cited as a means of increasing efficiency. But high availability support and support centered around internet-based electronic commerce infrastructures will be the keys to success in this market, concludes the report, Operational Efficiency in the System Support Market, Europe.

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