Software ROI, outsourcing boost stormy weather strategy

Australia's IT sector is in for another rough ride next year if industry analyst IDC Australia's predictions -- for growth to stop at 2.8 per cent in 2002, from 10.1 per cent this year -- are any indication.

It appears the effects of the US events of September 11, will hit Australia harshly. Before this day IDC Australia had predicted local IT revenue growth to be about 4.6 per cent.

Further findings from IDC's Operation Beacon -- a collection of trends and expectations from more than 100 analysts in North America, Western Europe and Asia - reveal that while hardware purchases have been sidelined, services, software and a focus on maximising existing equipment return on investment have surfaced as the key to riding out the storm.

IDC said during the past year, security and CRM software investments have continued to grow as Internet software has fallen on more difficult times. Due to increased interest in connectivity, demand for communications-related software is also expected to rise.

Another good performer will be the IT professional services market. IDC said in 2001, device-related services were down, but outsourcing, network consulting, and contract-based services were less affected by global variables.

"With the trend towards reduced in-house spending on IT solutions, services are suspected to defy any continuing economic unrest. In fact, IT service related revenues are expected to increase year-on-year to 12.5 per cent, up from 11.1 per cent in 2000."

IDC said this market is expected to see steady growth and "buoy" overall IT spending through 2004.

On the down side, the server market is expected to be worst hit by current economic conditions, suffering a decline of almost 18 per cent.

The networking hardware market is also in a "downward spiral", but will recover by 2003, the IDC report says.

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