Furthermore, after two years of recession, researcher IDC is now predicting that growth in Ireland will be nearly twice as fast as the rest of Europe, with IT services and smart handheld devices leading the way.
There is no doubt that the last two years were among the worst in the industry’s history, with growth plummeting from the high point of the dot.com boom and Y2K effects in 1999-2000, to negative figures in 2001 and 2002. IDC figures show that worldwide IT spending declined by 0.5 and 4.1 per cent in 2001 and 2002 respectively and should return to a modest growth of between 0.5 and 1 per cent in 2003.
At the end of last year, uncertainty over the ongoing effects of international events led to the researcher being unable to produce definite projections for 2003. IDC warned that a ‘significant geopolitical event’ could result in sluggish IT industry growth of less than 2 per cent, a figure that now seems to have been vindicated.
In Ireland, the figures for 2003 suggest an overall decline of 0.3 per cent. However, local industry figures, polled for their opinions by ComputerScope (see report beginning on page 38), display a renewed optimism for next year. As reported in ComputerScope last month, senior IT professionals are also cautiously optimistic that their budgets will be bigger and the financial health of their organisations will be better in the next 12 months.
IDC’s optimism for the Irish market, which it expects to grow at 7.1 per cent in 2004 compared to a Western European average of only 3.9 per cent, is down to a number of factors.
According to John Gilsenan, a consultant with IDC Ireland, there is both a ‘growing maturity’ in the Irish market with regard to outsourcing and a bigger market for first-time computer users, which does not exist in the more saturated markets of the larger European countries.
‘Ireland has traditionally been behind the curve compared to the rest of Europe with regard to outsourcing,’ he said. ‘But now people are being offered good deals to outsource to services companies and they are more willing to do so.’
Gilsenan added that there are still some companies in Ireland who have yet to deploy IT strategically, as well as a high instance of new companies, indigenous and foreign, setting up operations here. ‘There is still an element of catch-up in the Irish market,’ he said.
Oisin Byrne, country manager of rival consultancy, the Gartner Group, agrees that outsourcing is growing quickly in Ireland and is expecting compound annual growth in this sector to be about 10 per cent between now and 2007. However he cautions that this growth will come at the expense of other traditional IT services such as maintenance, systems integration and consulting.
Byrne pointed out that if a big company or financial institution signs up a large outsourcing deal with a leading IT company, that company then becomes responsible for many of the functions that might hitherto have been carried out by smaller or more specialist service providers. It would become responsible, for example, for systems integration, which might previously have been performed by one of the traditional consultancies, or maintenance and support, which might have been carried out by a traditional IT service company. Therefore, Gartner predicts that the overall IT services market in Ireland will grow at a comparatively modest 5 per cent annual growth rate until 2007.
IDC expects that 2004 could be the year of the ‘smart handheld device’ and is predicting colossal growth in this market, both locally and internationally. In Western Europe, it expects this market to grow by 95 per cent in value terms and for growth in Ireland to more than double, with an increase of 115 per cent expected.
‘It’s a market that has to take off at some stage,’ said Gilsenan. Byrne at Gartner is not expecting that the market for mobile terminals will remain flat, but cautions that Gartner’s definition of this market includes standard mobile phones as well as smart or ‘converged’ devices which integrate PDA functions with telephones.
IDC predicts that the market for packaged software will grow at a rate of 5.1 per cent in Ireland in 2004. Gartner expects an annual growth rate of 7 per cent between 2003 and 2007, but includes in its definition of this market, application integration middleware and portals, which it expects to be the main driver here with growth rates of 18 per cent over the same period.
08/01/04
Ltd
