IDC's latest update on information technology (IT) spending in Europe, the Middle East, and Africa reveals a bleaker outlook for the near term in the wake of the worldwide financial crisis. Growth of just under 3% is now expected for the EMEA IT market in 2009, which represents a 1.5-point drop compared to IDC's previous, pre-crisis forecast.
The downturn in the world economy is affecting demand for IT in both mature and emerging markets in EMEA, albeit somewhat differently. While IT spending in Western Europe will fall to just 1.2%, reflecting a sharp decline in capital investment with a contraction in GDP, the regions of Central and Eastern Europe and Middle East/Africa will continue to illustrate relatively healthy growth rates.
In terms of technology sectors and demand, IDC expects discretionary spending on IT hardware to be the main focus of cutbacks in 2009. PC refresh cycles will be delayed while new planned projects will be postponed or scaled back and, as business growth is projected downward, demand for storage and servers will be weak. Sharply falling ASPs will also affect revenues. Growth of -2% is expected here for next year, with positive growth only resuming in 2011.
Similarly, the growth rate for expenditure on software has been almost halved to 4.1% for 2009, reflecting IDC's expectation that major business software upgrades will be delayed, particularly in the infrastructure space. The IT services market will also feel the recession as demand for project-oriented services are affected, and pressure may abound to renegotiate existing outsourcing contracts.
Despite the troublesome short-term picture, there are a few silver linings:
--Although the hardware market will have a hard time, some segments like IP phones and smart handhelds will continue to show double-digit growth rates.
--Open source software will get an extra boost as a means for organizations to cut back on license fees.
--The development of the software-as-a-service business model will gain momentum as its pay-per-use promise becomes a serious alternative for the current licensing model.
--The outsourcing market will get an extra boost, reflecting efforts to further reduce non-discretionary IT expenditure.
--Green IT and virtualization are measures to improve datacenter efficiencies that will enable companies to drive infrastructure costs down.
--Business continuity and IT security will require attention and investment regardless of the economic climate.
--The credit crisis will eventually bring on more regulation and associated compliancy efforts, which is an opportunity for the IT sector in terms of required storage, software, and data management investment.
More information on the IT market can be found at http://www.supportindustry.com/
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