Market research firm the Yankee Group said Tuesday IT professional services would grow 6 percent over last year, with integration services rising 9 percent. Most of the growth is expected in the second half of the year.

Those figures are considerably higher than overall IT spending, which Goldman Sachs predicts will be nearly flat or up by a meager 1 percent this year. In a survey of CIOs conducted in January, market research firm Aberdeen Group found technology budgets are expected to grow an average of 2.7 percent over the next six to 12 months.

The Yankee Group warned that in choosing a consulting company, businesses should focus less on cost and more on building a relationship that develops IT projects with long-term strategic value. Examples of such projects include development of a Web services architecture, application management, and enterprise application integration.

"The current obsession with cost is shortsighted," said Andy Efstathiou, program manager for the Yankee Group's Technology Management Strategies unit. "Prudent C-level executives will change their focus during 2003 from cost to new functionality."

TenFold Corp., a Draper, Utah, developer of custom software, said customers today are demanding industry expertise from their IT vendors. "People buying technology are almost always interested in your business expertise," said Dudley Morris, senior vice president of business development.

Since the end of the dot-com era, companies have been scrutinizing their vendors more closely, with an intense focus on their track record with customers, quantitative returns on investment, and expertise in the client's industry. "Industry experience is hard to find sometimes, but it a plus," said Malcolm Howat, Web development manager for specialty steel maker Howco Group, Glasgow, Scotland.

For the next 12 months, IT services companies should expect a strong demand for application management, with Web services deployment picking up beyond that timeframe, the Yankee Group said.

"Enterprises have kept their wallets closed for the past 2 %BD years waiting for the economy to turn," Efstathiou said. "However, they will soon have to reopen their wallets and install new systems to maintain cost competitiveness."

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