IF FORECAST REPORTS by a number of IT research groups setting up shop in South Africa were a proxy, then it’s perhaps safe to bet that the country’s IT industry will absorb the effects of a shrinking global IT spend.<\/p>\n
As the traditional markets in the United States and Europe experience a squeeze on expenditure, a recent forecast by Forrester Research suggests that the severity and length of a US economic slowdown (the US is the biggest IT market) will have a negative effect on the worldwide market. The US accounts for about a third of total global IT spend.<\/p>\n
Far from that gloomy picture, the growth figures bandied about by IT market intelligence heavyweight IDC at least seem flattering. IDC, following Gartner and Frost and Sullivan, last month became the latest international research agency to set up shop in SA. IDC projects IT spend – buoyed by infrastructure projects such as the Gautrain and the 2010 Soccer World Cup – to rise from R68bn to R80bn\/year over the next few years.<\/p>\n
Gartner and Frost and Sullivan share in IDC’s optimism. “As both growth and expenditure taper in most mature markets, SA, India and China are fast emerging as the next growth frontiers,” says Jyoti Lalchandani, IDC’s regional vice-president for the Middle East and Central Africa (MEA), adding that SA currently accounts for 21% of the overall US$45bn (R355bn) expenditure in the region.<\/p>\n
Lalchandani says throughout the MEA regions IT markets are registering phenomenal growth figures, with rates of about two to three times faster than GDP. In SA, market growth is 10,3% against GDP of 4,8%.<\/p>\n
IDC SA country manager Nikki Quinn says: “In the local market the hardware sector posted an annual growth figure of around 6,3%, software grew to 9,5% and services recorded an 8% increase between 2007 and 2008.” This year Quinn projects hardware spend to grow 5%, with laptop sales anticipated to post double digit growth but desktop sales a marginal 3% growth. Software is expected to grow to 11%, up to $2bn (R15,8bn), while services is projected to grow 9% to $4bn (R31,6bn).<\/p>\n
However, SA’s projected growth figures pale against India’s. According to recent statistics released by the National Association of Software Services Companies of India, total IT sector revenue (excluding hardware) would hit the $52bn (R410bn) mark for the year to March, of which $40,3bn (R318bn) would be generated from outsourcing services to other countries.<\/p>\n
“Though SA lags India by far in terms of expenditure, indications on the ground seem to suggest that the market is maturing,” says newly recruited IDC analyst Richard Hurst, poached from rival IT intelligence house BMI-T.<\/p>\n