Gartner has predicted that enterprise IT spending in Europe, the Middle East and Africa will recover in 2011, after two years of decline.
However, government cutbacks mean that Western Europe is not expected to return to stronger enterprise IT spending growth until 2012.
The analyst house forecast that IT spending will reach $795.2 billion €576 billion) in EMEA next year, up 1.3% from 2010.
EMEA was the only region to have shown a decline in IT spending in 2009 and 2010. Gartner expects IT spend this year to be $784.8 billion (€568 billion) this year, down 2.1% from 2009.
Peter Sondergaard, senior vice-president and global head of research at Gartner, told the Gartner Symposium/ITxpo 2010 in Cannes: “This decline in IT spending in 2010 is placing EMEA as the slowest region to fully overcome the downturn.
“We expect Western Europe to record the worst decline in EMEA in 2010 (-3.3%) and experience the slowest long-term growth rate with a compound annual growth rate of 0.8% through 2014.”
“We forecast IT spending in government in EMEA to decline 2.8% in 2010 and total $139.6 billion (€101 billion). It will exhibit slow growth through 2014 as the public sector continues to focus on bringing budget deficits under control during the next five years,” said Sondergaard.
The computing hardware market was the only sector to return to growth in EMEA in 2010. Hardware spending was forecast to reach $79.4 billion (€57.4 billion) in 2010, up 4.6% on last year.
Sondergaard said: “We are seeing a rise in shipments across hardware due to the low volumes in 2009 and from organisations gradually returning their replacement cycles to a normal length.”
However, enterprise software spending will surpass hardware spending growth, which Gartner said is a trend to continue through 2014 as businesses begin a new software applications replacement cycle.
Meanwhile, Gartner said that the IT services market continues to struggle in EMEA and will be the slowest to return to growth. It is expected to decline by 5.6% to $234 billion (€169 billion) in 2010. The analyst attributed the decline to companies continuing to take a risk-averse and cost-focused approach to IT, which is preventing them from investing in process and product innovation.
In terms of industry sectors, Gartner forecast that only utilities will increase spending in 2010, and is expected to have the highest year-on-year growth through 2014. Enterprise spending in the sector is expected to reach $46.2 billion (€33.4 billion) in 2010, up 1.9% from last year, due to regulatory and policy changes, such as smart grids, that are requiring utilities to implement new processes, the required infrastructure and analysis of energy information.
This is supported by a recent survey by Oracle Utilities, which said that utility companies are not yet prepared for exploiting smart grid intelligence.
Nonetheless next year, only transport and education are expected to decline further, due to a continued cautious outlook in the former, and continued IT budget cuts in the latter.
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