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November 13, 2009

ICT market to stabilise next year

Europe cautiously optimistic about recovery

By Vinod

The European ICT market will come out of tailspin and stabilise next year, according to the European Information Technology Observatory (EITO).

EITO predicted that sales of products and services of IT, telecoms and consumer electronics would dip only slightly by 0.5% to 714 billion euros in 2010, compared with this year when sales have fallen by 2.2%.

Overall, the IT market has held up well against the economic battering of the past year compared with other sectors and EITO forecast a modest growth of 0.6% for the sector next year. This compares with a 3% growth rate in 2008 for the IT market and an expected shrinkage of 2.6% this year.

“Optimism is back about the recovery in the near future, but there are still many uncertainties about which sectors and segments will recover fastest. It can be seen in the US that investment rates in IT are higher than in any other segment. An up-to-date ICT infrastructure is a critical success factor – and companies are aware of it. Quick win/fast ROI projects are favoured (infrastructure vs. application),” said Frank Früh, project manager at EITO.

 

The emphasis on proven ROI and cost savings spelled good news for the outsourcing services market, which is up 4.2% this year and expected to rise 5.4% next year across Europe. UK figures are slightly lower at 3.1% this year and an anticipated 4.1% rise next year, but still healthy.

 

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Rather than the downturn, it is regulatory changes and changing user habits that affect the telecoms industry. Revenues are expected to remain steady with last year’s level at 295 billion euros. EITO found that while fixed-network telephony sales have been tumbling for years, this has been replaced by increasing data requirements.

Worst hit by the economic crisis was the consumer electronics market with sales expected to freefall by 8% to 58.5 billion euros this year and further losses of 6% expected next year.

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