IT services market bounces back in 2010,11: Gartner

The industry has rebounded following a GFC-fuelled decline in 2009

The Australian IT services market is set to rebound in 2010 and 2011 following a modest GFC-fuelled decline in 2009, according to Gartner.

According to the research firm, the local IT services market suffered a two per cent decline in growth in 2009, however 2010 is expected to see a growth rate of 2.4 per cent, and 2011, a 3.4 per cent growth rate.

Detailing its reasons for the expected turn around, the company said that Australia’s gross domestic product (GDP) was expected to register 3.3 per cent growth in 2010 and 2.7 per cent in 2011. This contrasts with just 1.3 per cent growth in 2009.

Gartner also predicts that at least some of the savings from cutbacks in government IT spending would now be reinvested in new IT initiatives to improve government agency processes and services.

According to the company, the resources sector is also investing in new and existing projects to meet export demand and is building IT infrastructure and applications to support those projects.

With Labor returned to power, the National Broadband Network (NBN) would also create direct demand for ICT products and services.

In assessing the inhibitors to growth in 2010 and 2011, the firm said cost optimisation remained on the agenda and would affect rates and contract values.

Greater CIO, CFO and procurement involvement in purchases would also lead to pressure on prices, even though volume is growing.

In the government sector, federal agency budgets would be constrained for up to three years in order to pay back debt from the fiscal stimulus package, prohibiting some government IT initiatives.

Commenting on the IT services market, Gartner analyst, Rolf Jester, said in a research paper that governments would be attracted to shared services as a way to save money and free up staff for genuine service improvements.

“These programs often meet resistance from staff, but they can create demand for consulting, development, integration and some continuing management services,” the paper reads. “At present, concepts such as "government cloud" can lead to potential business for the right service providers.

“Businesses and government agencies have resumed "normal" spending on IT products and services. However, they are practicing tight money management to get the best value they can. Consequently, projects to save money, such as virtualisation, are in favour, as long as the upfront cost is not too high.”

Join the newsletter!

Error: Please check your email address.

Tags Gartner

More about etworkGartner

Show Comments

Market Place

<img height="1" width="1" style="border-style:none;" alt="" src="//insight.adsrvr.org/track/evnt/?adv=bitgblf&ct=0:jkis3bum&fmt=3"/>