IT staff shortages, coupled with a rush to launch and complete E-business projects, is driving an explosion in demand for E-services, a market in which revenue is expected to skyrocket from $10.6 billion last year to $64.8 billion in 2003, according to Forrester Research.

"The average person starting today is clueless about what architecture to settle on, as well as what hardware and software products to buy,'' says Dwight Gibbs, chief technology officer at online investment and financial-services firm Motley Fool Inc. "They face an almost vertical learning curve, and the only way they can climb it is to outsource."

The biggest myth in outsourcing, though, is that E-services providers can provide one-stop shopping. "No single company can come close to handling an entire E-business strategy and implementation," says Johna Till Johnson, VP and service director of global networking strategies for the Meta Group. In fact, 50 businesses surveyed by Forrester Research say they use an average of three E-services vendors for their outsourced projects.

E-service providers typically are divided into three groups: strategy, applications integration, and infrastructure companies. Consolidation, either as mergers or alliances, is common within each group, but not among them. Until that happens, no single company will be able to provide consulting, devise an E-business strategy, design a site and integrate applications, or build and manage the infrastructure, Johnson says.

As consolidation increases, IT managers must be aware of the potential problems. "It's very difficult to quickly integrate different companies that typically have different corporate cultures, methodologies, management styles, and may be located far away," says Christine Overby, a senior analyst at Forrester.

But consolidation will help managers because they'll have to deal with fewer vendors. "Web hosters are realizing that users need more than bandwidth and rack space for their servers," Gibbs says. "They're beginning to focus on providing professional and ancillary services, such as storage, backup, monitoring, and performance tracking."