The UK’s software and IT services market could be heading for a full decade of recession, according to a new report, and it’s all the fault of hot topics like cloud computing and bring your own device (BYOD).
The tech analysis company TechMarketView claims the UK software and IT services (SITS) field shrank by almost 3% in real terms last year, the fourth year in a row it had fallen. The report claimed the market will not grow in real terms, which means taking into account CPI inflation, before 2016.
"These forecasts reinforce our view that the UK SITS market will grow slower than the economy for the foreseeable future," the report said. "Indeed it is hard to envision a set of conditions when it would once again grow faster than GDP."
Interestingly the report claims that alongside the economic situation in the UK and across Europe, there are other reasons the UK SITS sector will fail to grow. Elements such as cloud computing, the BYOD craze of people using their personal devices for work purposes and even social media will have a negative impact.
The report said the "inexorable march of disruptive technology trends" such as those listed above as well as the consumerisation of enterprise, mobile internet, big data and offshoring will actually drag down the field even further.
"The key characteristic they have in common is that they are all designed to reduce the cost of computing — in other words, they are all deflationary," the report said. "The issue is not whether or not demand for SITS is increasing. The issue is whether any increase in demand is sufficient to mitigate, if not outweigh, price deflation, especially given the now enduring customer sentiment of ‘more for less’."
"Suppose you assume that price deflation pressure is only 10% a year. By the time you add in the effects of inflation, we would need at least a 12% increase in demand just to keep the UK IT market flat. Possible? Maybe. Likely? Probably not," TechMarketView concluded.
