Technology Service Sales Won't Recover in 2010By Jessica Davis | Posted 2010-01-25 Email Print
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While 2009 may be over, the hangover from the worst recession in memory will linger on. Technology service sales will take their time recovering as businesses remain conservative in their IT services spending in 2010. When will they loosen up those purse strings again?
The IT services market will
continue to feel the 2009 recession hangover in 2010, not seeing a
"substantial" recovery until at least 2010. That might be tough news for
vendors and IT solution providers to stomach after the year they’ve been
through in 2009.
"Vendors who are planning on 'pent-up customer demand to fuel substantial growth’ in 2010 should rethink their strategies," said John Madden, co-author of a new research report from analyst firm Ovum, in a statement.
"While there are encouraging signs for an economic recovery, CIOs and IT decision-makers are clearly more cautious when it comes to making short- and long-term IT investments," he added.
Ovum is forecasting that the
North American market will show growth of just over 2 percent in 2010 and
increase to slightly under 3 percent in 2011. Ovum further forecasts that
project-led and applications services and business process outsourcing will
slightly outpace growth in infrastructure and support services by 2013.
In 2009, businesses focused on cutting costs and increasing efficiencies, and that’s why discretionary consulting, application and business process outsourcing projects declined. At the same time, data center outsourcing and other infrastructure services suffered a lesser decline as companies looked for service providers to take over some IT functions.
Ovum said that North American end users will remain in a defensive IT spending position as they wait for a stronger recovery, something that will likely arrive in 2011 and 2012, Madden said.