Latest TechMarketView report points to another decade of decline

TechMarketViews publishes latest MarketViews UK SITS Market Size and Forecast

Last Decade...Next Decade?
The last decade had hardly got under way when Richard Holway rather stunned the industry with his prediction that the UK IT market would likely end the first decade of the 21st century as a lower proportion of UK GDP than when it started. This was in November 2002 and we were at the tail end of the dotcom downturn with little sign of recovery. Holway’s pronouncement did not fit well with the industry’s hopes and expectations, despite the fact that the UK software and IT services (SITS) market—generally the fastest growing IT segment—was only jogging along at around GDP growth rates, compared to the spectacular 20%+ growth seen in the run-up to Y2K.

Well, Holway was right!

And here we are, just at the beginning of the second decade, and we fear that it will be no different. As best as we can call it, we think the UK IT market will probably grow slower than GDP over this decade too.

2011 ‘double-dip’?
We are especially nervous about the prospects for market growth in 2011. Of late, we have been asking the ‘captains of industry’ how business is going this year. Most talk of healthier pipelines and ‘more conversations’ with clients, which they reasonably take as signs of demand returning. None, by the way, are calling it anything like ‘business as usual’ and most are still cautious on their outlook.

But when we ask them whether customer decision-making is getting any faster or easier, the general answer still seems to be no. In other words, the pipeline may well be getting fatter, but there’s still a thin nozzle at the end.

And when we then ask them what’s in the pipeline, it’s very largely projects that had previously been delayed, cancelled or curtailed. In other words, very little genuinely new demand.

Our worry is this. Although the IT ‘tap’ is now being turned back on again, it’s more a dribble than a deluge. Any demand recovery in the second half of this year may be very muted indeed, leading to another year of market decline. Indeed we expect the UK SITS market will contract by nearly 2% this year in real terms, about half the decline in 2009.

Now ask yourselves this. What will happen once the delayed/cancelled/curtailed projects have finally flushed through the pipeline? What’s following on behind them? As yet, not very much. In other words, at current course and speed, there is a real risk we could well be in for a ‘double dip’ in the UK SITS market in 2011.

Read more in our latest MarketViews report
TechMarketView Foundation Service clients can see our full market forecasts, compiled in cooperation with our research partners, PAC, in our MarketViews UK SITS Market Size and Forecast report, available for download now on our website.

Posted by HotViews Editor at '06:00'