Analyst IDC has revised its forecasts for the IT market in Europe, the Middle East, and Africa in light of recent economic events and says it expects growth of just under 3% in 2009.
The new figure is a 1.5% drop on its previous pre-downturn estimate but the good news is that Central and Eastern Europe and the Middle East and Africa will continue to have relatively healthy growth rates.
"The IT market in Western Europe has moved into a phase of very sluggish growth for the foreseeable future," says IDC research director Marcel Warmerdam. "Many IT users are already resetting priorities in view of tougher times, with many projects being postponed or cancelled."
IDC's crystal ball-gazers reckon that although EMEA's emerging economies are affected by the credit crunch crisis, they will be more resilient than their western counterparts.
"While growth in the IT markets of CEE and MEA regions will slow in 2009, affected by downturns in Russia, Turkey, and South Africa, we anticipate a sharp recovery already in 2010 in view of requirements for infrastructure development," says Steven Frantzen, IDC's senior vice president for EMEA research. According to IDC, the IT markets in Central and Eastern Europe and Middle East and Africa will experience growth of 9.4% and 8.5% respectively in 2009.
In terms of technology sectors and demand, IDC expects spending on IT hardware to be the main focus of cutbacks in 2009. PC refresh cycles will be delayed while new planned projects will be postponed or scaled back and, as business growth is projected downward, demand for storage and servers will be weak.
IDC has slashed its growth rate for software spending by almost half to 4.1% for 2009, reflecting the analyst's expectation that major business software upgrades will be delayed. The IT services market will also feel the recession as demand for project-oriented services will be affected, and there may be pressure to renegotiate existing outsourcing contracts.
"We are likely to see a major shift in the type of IT spending as users increasingly focus on cost reduction and gaining efficiencies," said Warmerdam. "In fact, despite the troublesome short-term picture, there are a few silver linings."
Wamerdam says that although the hardware market will have a hard time, some segments like IP phones and smart handhelds will continue to show double-digit growth rates. He also cites green IT and virtualisation as other silver linings in IT that will improve datacentre efficiencies and allow firms to drive infrastructure costs down.
Business continuity and IT security will require attention and investment regardless of the economic climate. And to cap it all, he says that the credit crisis will eventually bring on more regulation and associated compliancy efforts, presenting an opportunity for the IT sector in terms of required storage, software and data management investment.