The tech slowdown will continue up to the third quarter of 2009, according to global research firm Forrester. IT consulting and systems integration services will hit the wall in 2009, while IT outsourcing growth will remain moderate in 2009 and 2010, getting a small respite from the economic slowdown, it said in its report released on Thursday.
Because of the slowdown, companies will turn to vendors that can help cut costs, but growth in IT outsourcing revenues will remain moderate due to the use of lower-cost offshore resources and smaller-scale outsourcing deals, among other reasons, according to the report.
On a positive note, the Research firm said that while the US IT market outlook is bad, it is better than the 2001-02 technology downturn. “This time, computer equipment vendors will see declines of 5-10% in US revenues on a quarterly basis, not the 20% to 25% drops of the early 2000s,” said Andrew Bartels, the report’s author and vice-president, Forrester Research.
Forrester has projected a growth of 1.6% growth in IT spends for 2009, assuming a decline in US GDP in the third quarter of 2008. The decline will accelerate in the fourth quarter of 2008 and the first half of 2009 before a weak recovery starts in the second half, the report titled ‘US IT Market Outlook: Q4 2008’ said.
The report is based on an analysis of US Department of Commerce data and the financial reports of 49 IT vendors.
The industries that present the best opportunities for IT vendors in 2009 will be the federal government, primary production, consumer products and pharmaceuticals, chemicals and oil and gas, public services like healthcare and education, insurance, utilities, telecom, and most professional services which will not be impacted much by the recession.
On the other hand, those most likely cut back their IT purchases are IT goods and services including financial services, consumer durables, construction and housing, retail, and industrial products (including autos).
The financial services industry is expected to cut IT purchases by 3% in 2008 and by 4% in 2009. While the construction industry is expected to cut purchases back by 2% in 2008 and 2009. The retail industry will have no growth in IT purchases in 2009, and IT buying by industrial manufacturing will slow to 1% in 2009, it noted.
Those with mixed IT buying prospects include high-tech products, wholesale trade, media and entertainment, transportation and logistics. Some professional services like consulting and advertising services will see slowing of growth in either 2008 or 2009, it pointed out.
Source: Economic Times
Showing posts with label IT purchases. Show all posts
Showing posts with label IT purchases. Show all posts
Friday, December 12, 2008
Friday, October 17, 2008
A ‘prolonged’ recession would impact IT industry
The on-going recession would mean several quarters of declines in IT purchases…Software and IT services vendors will start to feel the pinch.
Forrester Research, an independent research firm has outlined an IT spending scenario for a long and deep recession for technology companies. According to this latest Forrester scenario, “A prolonged recession would mean several quarters of declines in IT purchases, not just two or three quarters with little or no growth in late 2008 and first half 2009.” This is the first time Forrester has outlined the possibility that the economic crisis could spark a short-term contraction in IT spending as opposed to a slowdown in growth.
The latest Forrester report offering this scenario - What The Financial Crisis Means To The Tech Market, by Andrew Bartels (VP & Principal Analyst, Forrester Research), states that on a full year 2009 basis, a sustained recession could lead to annual US IT spending growth of 2-3% and global IT spending growth of 3-4%. Says Bartels, “This is just a scenario as an acute financial crisis has hit not only the US but also countries in Europe and Asia.”
In his Sept’08 review of the US IT market, Bartels had predicted a distinct slowdown in growth for US business and government purchases of technology goods and services due to an assumed recession starting in the third quarter. Elaborates Bartels, “We continue to estimate global IT spending growth in 2009 being 7-8%, and we are still sticking to our forecast of a sharp decline in growth – instead of a contraction – for US tech purchases. Why? Our tech market forecast already presumes the recession that is actually happening… Still, with the financial crisis now spreading around the world, risks have grown that the US and other major countries will experience a longer and deeper recession than we had expected.
This scenario will help technology vendors to be prepared, and to mould their strategy, according to the economic environment.” He further adds, “The Software and IT services vendors will anyways – with or without the said scenario – start to feel the pain though sales of these products and services have so far avoided much slowdown in 2008. They will be hit hard in the next three quarters. Still, "hit hard" is relative — vendors in these categories will have on average 3% to 5% growth instead of the 9% to 12% growth they've seen earlier in 2008.” Stating that the rules for technology vendors’ success have changed, Bartels recommends, especially to the US based vendors, to refocus on the US market as it (US market) is likely to recover from a global slowdown sooner and stronger than other markets.
Forrester Research, an independent research firm has outlined an IT spending scenario for a long and deep recession for technology companies. According to this latest Forrester scenario, “A prolonged recession would mean several quarters of declines in IT purchases, not just two or three quarters with little or no growth in late 2008 and first half 2009.” This is the first time Forrester has outlined the possibility that the economic crisis could spark a short-term contraction in IT spending as opposed to a slowdown in growth.
The latest Forrester report offering this scenario - What The Financial Crisis Means To The Tech Market, by Andrew Bartels (VP & Principal Analyst, Forrester Research), states that on a full year 2009 basis, a sustained recession could lead to annual US IT spending growth of 2-3% and global IT spending growth of 3-4%. Says Bartels, “This is just a scenario as an acute financial crisis has hit not only the US but also countries in Europe and Asia.”
In his Sept’08 review of the US IT market, Bartels had predicted a distinct slowdown in growth for US business and government purchases of technology goods and services due to an assumed recession starting in the third quarter. Elaborates Bartels, “We continue to estimate global IT spending growth in 2009 being 7-8%, and we are still sticking to our forecast of a sharp decline in growth – instead of a contraction – for US tech purchases. Why? Our tech market forecast already presumes the recession that is actually happening… Still, with the financial crisis now spreading around the world, risks have grown that the US and other major countries will experience a longer and deeper recession than we had expected.
This scenario will help technology vendors to be prepared, and to mould their strategy, according to the economic environment.” He further adds, “The Software and IT services vendors will anyways – with or without the said scenario – start to feel the pain though sales of these products and services have so far avoided much slowdown in 2008. They will be hit hard in the next three quarters. Still, "hit hard" is relative — vendors in these categories will have on average 3% to 5% growth instead of the 9% to 12% growth they've seen earlier in 2008.” Stating that the rules for technology vendors’ success have changed, Bartels recommends, especially to the US based vendors, to refocus on the US market as it (US market) is likely to recover from a global slowdown sooner and stronger than other markets.
Subscribe to:
Posts (Atom)