Forecast: NBN, school PCs underpin strong growth

James Riley
Wednesday, 19 August 2009 07:50

IT Policy - Government Tech Policy

Government spending will cushion the Australian IT market from the worst effects of the global financial crisis, while the NBN roll-out will give the sector a medium and long term shot in the arm, a report from analysts Business Monitor International says.

The five-year BMI forecasts the domestic IT market will grow from US$18 billion (A$21.7 billion) in 2008 to US$21 billion in 2013.

The report says Government stimulus hand-outs helped the tech sector produce positive quarterly growth numbers since the GFC began – despite reduced business investment – by keeping consumer demand relatively strong.

It says ambitious and fully budgeted Government IT projects ranging from the health sector, to Defence, the NBN and the computers in schools program will all play a role in underpinning growth in the sector.

The BMI forecast puts the construction of the NBN at the centre of the Rudd Government’s ICT strategy, saying the network will both drive economic growth – with projected GDP gains of 1.4 per cent after five years of deployment – and foster the creation of a digital economy.

BMI based its forecast assumptions on broadband penetration rates of 37 per cent at the end of this year rising to 45 per cent at the end of 2013. It acknowledges cautiousness about broadband growth predictions, because of the complexities Government faces both in building the NBN on schedule and in reforming telecommunications regulation.

Continued strong computer sales would continue for the period to 2013 with a compound annual growth rate of about 2 per cent – with the main driver being government purchasing programs, but supported also by the strength of the consumer notebook market.

The IT services sector may well be a beneficiary of the GFC. Services accounted for 42 per cent of the Australian IT market in 2008, and are expected to enjoy a CAGR of 5 per cent in the next five years.

BMI says that the financial crisis has forced companies to look more critically internal IT departments, making them more willing to outsource at least some functions to services companies.