After five years of volatile revenue growth, the CRM Service Providers industry is projected to expand, according to latest report from IBISWorld, the nation's largest publisher of industry research. As corporate profit increases and private investment in computers and software rises, revenue is forecast to increase at an average annual rate of 4.0% to $8.3 billion. In 2012, revenue is expected to rise by 4.0% as small businesses seek better ways to manage their client relations and prices of CRM services drop. 

The CRM Service Providers industry is expected to remain strong in 2011, despite the volatility that it experienced during the past five years. Low corporate profit and limited capital investments caused the industry to experience unstable revenue streams during the recession. However, when the economy began to bounce back in 2010, sales grew and the industry became steadier. From 2006 to 2011, revenue is expected to increase at an average annual rate of 1.5%. In 2011, revenue will rise 6.4% to $6.8 billion as companies invest more in their capital equipment to improve their client relations. 

In addition to volatile revenue, customer preferences are changing; companies prefer that their CRM services be accessible via the internet instead of being installed and housed on their servers. As a result, the industry is providing more on-demand CRM services where all information is accessible over the web. Industry players are also integrating social networks with their programs, so customers can monitor company comments on networks such as Twitter. 

According to IBISWorld analyst, Janet Shim, in the five years to 2016, industry revenue is forecast to grow by an average annual rate of 4.0% to $8.3 billion. "Firms will continue to improve their services to meet the needs of the customers and invest in cloud space to make it easier to add more clients," says Janet Shim. The CRM System Providers industry is moderately concentrated, with the largest firms including, SAP AG, Salesforce, oracle Corporation and Microsoft Corporation. The industry is also expected to consolidate. As demand rises, these larger firms will look to gain more market share and are expected to acquire smaller firms with advanced technology. Already in 2011, Oracle acquired RightNow Technologies to gain larger access to cloud CRM technologies. From 2011 to 2016, the number of industry companies is projected to decrease at an average annual rate of 1.3% to 172 firms. 

For more information, download the full report from IBISWorld on the CRM Service Providers industry

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