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Slower Growth Seen in Global IT Market Next Year

by: Karen Cayamanda

Tuesday, October 11, 2011 |

Global IT Market to Decline in 2012

In Forrester Research’s latest report called Global Tech Market Outlook for 2011 & 2012 (from deccanherald.com), the global IT market research firm predicts that the financial crisis in the US and Europe will affect the global IT spending in 2012. It will still be a positive growth rate, though slower. In 2011, global IT spending reached 11.5 percent, but this will weaken to 5.5 percent next year.

Weak market growth will be seen in the US which will post only 6.4 percent. Europe will likewise see slower IT activity. It is predicted that Eastern Europe, Middle East, Africa, and Latin America will post a growth rate of 12 percent in 2012. This is primarily due to worries brought about by the financial crisis which started in the middle of 2011 and eventually affecting the last quarter of the year.

Forrester said 2011 will have a better global IT market growth rate than 2012, as the first two quarters of the year saw strong IT demand before the economic downturn in the US and Europe.

From 8.1 percent growth in spending on software in 2011, it will drop to 6.2 percent next year. Other aspects of the IT market are also predicted to grow: IT outsourcing (6.3 percent), IT consulting and systems integration (7.6 percent), and computer equipment (6.6 percent).

While it is predicted that global IT spending will weaken next year, the Indian IT industry is not alarmed, at least not yet because according to industry body Nasscom President Som Mittal, companies haven’t reduced their IT budgets.

There’s no point denying that the outsourcing industry will not feel the impact of the financial crisis. While some may think that this state of the global economy will push US- and Europe-based companies to outsource IT processes and increase or maintain their IT budgets, business owners may do the opposite and be more cautious about their IT spending in the next few years.

Forrester predicted a positive growth but at a slower pace. This forecast should keep IT outsourcing service providers from letting their guard down. In times of economic uncertainty, it pays to be more cautious and monitor recent economic developments to mitigate the risks or lessen the impact of whatever the crisis will bring.

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