Gartner Dims Growth Expectations for Global IT Spending in 2012
Jan 06, 2012
Though Gartner's downward revision for 2012 global IT spending growth may well be accurate, that doesn't mean companies should assume their opportunities are shrinking. Many global IT markets are still quite robust, suggested Beni Lopez, chief globalization officer of Softtek. What's key is knowing where to concentrate one's efforts.
Gartner (NYSE: IT) has released its global IT spending projections for 2012: It is forecasting a 3.7 percent increase from 2011 to US$3.8 trillion. This forecast is a downward revision from its earlier 2012 outlook of 4.6 percent growth. Last year, IT spending clocked in at $3.7 trillion, which was up 6.9 percent from 2010 levels.
The Big Four
No sector was spared in Gartner's somewhat gloomy prognostication.
All four major technology sectors -- computing hardware, enterprise software, IT services and telecommunications equipment and services -- will experience slower spending growth this year than previously forecast, the firm said.
The reasons include faltering global economic growth, the Eurozone crisis, and the impact of Thailand's floods on hard-disk drive production.
The floods in Thailand have already had an impact on several tech companies. Intel (Nasdaq: INTC), for example, recently revised its Q4 guidance in large part due to sourcing issues resulting from those floods, which put one-third of the country underwater.
Telecom equipment spending is expected to show the strongest revenue growth in 2012 -- 6.9 percent. The enterprise software market will follow, with a 6.4 percent growth rate. Computing hardware will grow 5.1 percent, IT services will grow 3.1 percent, and telecom services 2.3 percent.
Gartner did not respond to our request for further details.
Smaller Firms Get Opportunity
More than likely, Gartner's projections are on the money, Sanjeev Dahiwadkar, president and CEO of IndiSoft, told the E-Commerce Times.
However, that does not shut the door on opportunities in the IT sector, he added.
In the U.S., "I think smaller firms that are able to provide affordable products with a clear ROI will be in greater demand from companies looking to save costs," Dahiwadkar said.
The Looming Cloud
Also, there is the matter of the cloud Test Drive the Public Cloud for $1. Windows & Linux Cloud Hosting. Click Here. and its ever-growing influence on how companies organize and deliver their IT services.
"While the global economy always plays a factor in IT spending, the emergence of the cloud has a major impact on how enterprises are allocating IT budgets," Tidemark CEO Christian Gheorghe told the E-Commerce Times.
The cloud and the social, mobile revolution are causing enterprises to rethink everything, he said -- from increasing business value in an ever-competitive market, to enabling more agile responses to customer needs and overall changing business conditions.
Cloud computing become such a potent force in the industry that it will challenge the laws of demand this year, said Antonio Piraino, CTO of ScienceLogic.
"Simply put, the price of the cloud will go up, and demand will rise alongside it," he told the E-Commerce Times. That will be due to cloud's elasticity and agility, he said. Corporate IT spend will -- as Gartner predicted -- still be strained this year, Piraino continued. However, "businesses will be willing to spend larger portions of their budgets on cloud-based technology."
The Case for Global Growth
While global events in Europe and Thailand were major reasons for Gartner's downward growth revision, many global IT markets are still quite robust, argued Beni Lopez, chief globalization officer of Softtek.
Although "global economic uncertainty is certainly causing many to be cautious about their forecasts," he told the E-Commerce Times, even a service provider such as Softtek -- services being on the low end of Gartner's growth projections -- can expect a strong year depending on where it concentrates its efforts.
"Our footprint is in the Americas, and our revenue is almost evenly split between the U.S. and Latin America," Lopez said. "Latin America is the fastest-growing region in the world, at a 9.5 percent CAGR thru 2015. And the U.S. will certainly outperform Europe in terms of growth."
Softtek's business in the U.S. grew over 25 percent in 2011, he noted, thanks to services from the company's delivery centers in Mexico. "That is huge, since we definitely outperformed the market," he pointed out. "And it's even more remarkable if you take into consideration all the bad press that Mexico has been receiving."