Rebound tipped for services market

Stephen Withers
Monday, 25 January 2010 08:07

IT Industry - Market

An industry analyst firm is tipping better than 4.5% growth for the Australia and New Zealand IT services market during 2010. But India's set to do a lot better.

Industry analyst Ovum is predicting the IT services market in Australia will grow by at least 4.5% this year, with a return to "pre-recessionary growth levels" perhaps as soon as 2011.

"A substantial level of interest is being shown by IT services vendors in the ANZ market, be it from a consulting-led view and the associated uptick, as well as driving into some of the more non-traditional verticals, ie chasing the money in utilities and public sector," observed Jens Butler, principal IT services analyst.

"Of the OECD economies, ANZ is currently leading the pack in terms of economic performance and will see further influx of investment that will drive the services market to pre-recession growth levels by 2011," added Butler.

According to Ovum's analysis. the consulting segment was hit particularly hard, although the impact of the 'recession' (unlike many economies, Australia did not actually experience a recession during the GFC) was spread over many parts of the IT services market.

Conversely, infrastructure outsourcing and support services fared well.

Ovum's prediction is that the market will grow to over $14 billion by the end of 2013.

If 4.5% growth sounds good from where you're sitting, think again. Ovum is also predicting the IT services market in India will grow by 23% this year,  and will more than double from $$10 billion in 2010 to over $24 billion in 2013.

Like Australia, India did not experience a technical recession.

"The recession did impact the IT services market in India, with spending growth across all service lines witnessing a decline. However, growth in the Indian IT Services market is picking up as customers have renewed spending and are putting out work that was on hold during the past year," said Ovum's Hansa Iyengar.

"The resilience of the Indian economy and its rapid progress to normalisation should bring more investment, driving growth in the sector," added Iyengar.