Accelerating Software Sales to Spur IT Consulting, Systems Integration DemandBy Jessica Davis | Print
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Accelerating software sales will drive more demand for IT consulting and systems integration, according to a recent report from Forrester Research. That's positive sign for the channel, and a higher margin business than hardware sales.
While global IT purchases will rise 7.1 percent in 2011 to $1.7 trillion, don't count on heavy hardware sales to fuel that growth, according to Forrester Research.
That's because the computer "restocking and replacement boom" that fueled market growth in 2010 is coming to an end. Hardware sales growth is slowing to 7.4 percent, the company reported. Sales of communications equipment will also lag the overall tech market. Enterprise demand will remain strong for wireless, unified communications and video conferencing, but equipment sales to carriers will be more measured.
But not all is lost. Software sales are starting to accelerate, and with them will come an increased demand for IT consulting and systems integration services, according to Forrester. IT outsourcing will match overall market growth, the firm said.
"Our forecast of 7.1 percent for IT purchases is still a bullish one, given the economic weakness in Europe, the questions about the US recovery, and the potential slowdowns in Asian economies," said Andrew Bartels, vice president and principal analyst at Forrester Research, in a statement. "The projected growth of 7.2 percent in 2010 was a rebound from depressed levels in 2009, but our forecast of similar growth in 2011 is actually more impressive because it comes on top of the good growth in 2010."
By geography and calculated in US dollars, the Latin America and Eastern Europe, Middle East, and Africa (EEMEA) regions will have the highest growth rates in 2011, both at 9.8 percent, Forrester said. IT purchases in Asia Pacific will grow by 8.5 percent, with slow-growing Japan offsetting faster growth in China and India. The US tech market will grow slightly faster than the total global market, with 7.5 percent growth, as investments in cloud and Smart Computing solutions allow companies to grow profits despite weak revenue increases. IT purchases in Canada will rise by 4.9 percent. Western Europe and Central Europe will have the lowest growth rate, at 4 percent, with the combination of weak economic growth and a depreciating euro holding growth down.