The guys with monstrous Excel files over at Ovum have dampened expectations of a quick recovery for the UK and Ireland’s IT services market by predicting real-term growth of less than 2% in 2010.
According to the depressing forecasting model compiled by the global advisory and consulting firm, the UK&I market will not see pre-recessionary growth levels until 2011 at the earliest.
By the end of the forecast period in 2013, the UK and Irish IT services market will grow to over £32 billion. However, less than a third of this will come from the public sector which is facing trenchant cuts.
No quick bounce back in 2010
Ovum’s model shows that the UK&I IT services market is passing the bottom of the trough. However, the recovery will be a slow ascent rather than a quick bounce-back.
Dr Alexander Simkin, co-author of the forecast and lead of Ovum’s Market Trends project, said: “Some IT services vendors are pinning their hopes on a marked uptick in the UK and Ireland in 2010. “They need to take a more realistic view: the market will remain challenging for at least 12 months with only modest growth overall during 2010.”
Consulting has been hit hard
Research revealed that the recession has impacted the IT services market with varying levels of severity depending on the horizontal. Consulting was hit particularly hard and will be slow to make a comeback.
Infrastructure outsourcing and support services have shown relative steadiness, while application-led outsourcing is expected to benefit from pent-up demand after taking a drubbing in 2009.
John O’Brien, the model’s co-author and a specialist in the UK IT services market, said: “Demand for IT services from the commercial sector was strongly impacted in 2009 as end users moved to a ‘keeping the lights on’ strategy.”
Public sector cuts
Ovum predicts that as government comes to terms with its borrowing, public sector IT spend will face trenchant cuts. “The UK public sector has been relatively shielded from macro-economic forces. But that’s going to change,” said O’Brien. “By 2012, we project that the public sector IT services market will be growing slower than the private sector, an inversion of the historical pattern.”