Technology Service Sales Won't Recover in 2010

By Jessica Davis  |  Print this article 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.

Click here to check out how technology services fared during the recession with OnForce's 2009 Q4 and year-end market numbers.

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.

OnForce's CEO says high unemployment will drag on technology sales to business in 2010. Click here for more.

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.

Jessica Davis covers the channel for eWeek and Channel Insider. Her technology journalism career began well before anyone heard of the World Wide Web and has included stints at Infoworld, Electronic News/EDN, and the Philadelphia Business Journal. Her work has also appeared on CNN and Forbes.com. She has covered hardware, software and networking, as well as the business side of technology. She has won several journalism awards, including a national ASBPE award for best staff-written column, and was named Marketing Computers hardest working tech journalist on their inaugural list of top tech journalists. Jessica can be reached at jessica.davis@ziffdavisenterprise.com

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