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The first edition of MarketViews from TechMarketView LLP, with forecasts produced in partnership with PAC, finds that the UK software and IT services (SITS) sector shrank (in real terms) in 2008 - the first decline since 2003. The report also forecasts an even steeper decline in 2009. Although the market will show a third consecutive year of decline in 2010, TechMarketView forecasts that the recovery will only start in the second half of 2010 resulting in a return to modest growth in 2011. However even these bleak forecasts depend on economic conditions not deteriorating still further. Should things get worse, then the SITS recession could be deeper and longer than even we predict, particularly in the private sector. As ever, IT suppliers with a relatively high exposure to the public sector will be less impacted. The slump is mainly due to businesses reining back "discretionary" IT spending, driving down the demand for new software licences and related project services. It's "make do and mend" all over again. We expect spend in these segments - comprising 55% of the total UK SITS market - to shrink by some 3%-5% on average, with IT Training suffering the most. In contrast, the UK outsourcing market will grow - but not fast enough to mitigate the decline in software and project services. As in prior years, BPO is the fastest growing SITS segment - around 8% growth - though we expect application outsourcing (SaaS/ASP) will grow faster by 2011. Outsourcing provides the means for users to reduce IT spend in the short term and hence its current popularity
Posted by Richard Holway at '16:00'