Small Business Recovery Not Complete Until 2011, Report Warns
While the impact of the global recession was no surprise, the extent to which small and midsize businesses were adversely affected was greater than anticipated, according to a report by research firm IDC.
As a result, IDC forecasts worldwide SMB spending on information technology will increase by 5.5 percent over the 2010-2014 period, considerably lower than previously forecast. Key findings from IDC's SMB forecast include findings that worldwide SMB IT spending will grow to nearly $629.3 billion in 2014, and despite the $17.4 billion spending increase expected in 2010, SMB IT spending levels will not return to 2008 levels until 2011. While SMB spending declines affected all categories of hardware, software and services, the spending recovery will vary by technology type. IDC's report said it expects SMB spending on PCs and peripherals to experience the strongest growth, followed closely by packaged software outlays, while systems and storage spending will be the slowest growing.
"The downturn had a devastating impact on SMBs worldwide," said
Ray Boggs, vice president of small and medium business and home office
research at IDC. "Moving forward, small businesses will not follow the
past pattern and return to prerecession's spending levels more quickly
than midsize firms. Instead, SMBs of all sizes will remain cautious
with their IT spending over the next several years."
The report also predicted SMB spending growth will be strongest in
Central and Eastern Europe, the Middle East and Africa, although
spending will not recover to prerecession levels until 2011. The
developing markets of Asia/Pacific and Latin America will also
experience growth of more than seven percent throughout the forecast
period, while SMB spending growth in developed regions will be roughly
three to four percent. The firm noted North America, Western Europe and
Japan collectively represent about 70 percent of worldwide IT spending
"The diversity of the SMB market will continue to be one of its
hallmarks," said Boggs. "Given that the developed regions account for
the largest share of SMB spending, and the developing regions represent
the greatest opportunity for market growth, the global market really
becomes a 'tale of two regions.' To succeed, technology providers need
to develop separate strategies that address the distinct needs of
companies in each of these settings."
The IDC study, "Worldwide Small and Medium-Sized Business 2010-2014
Forecast: Recovery and Change in SMB IT Spending by Category and
Region," forecasts spending by midmarket companies across major
geographic regions. Total IT spending is presented for 2010-2014, along
with the baseline year of 2009. Detail on spending totals is provided
for key hardware, software, and services technology areas: PCs and
peripherals, systems and storage, networking equipment, packaged
software, and IT services. The full 25-page report is available for
"Technology will be playing an increasingly important role in keeping
SMBs competitive on a global basis," said Boggs. "While business
expansion, especially in developed regions, will not always be
associated with new hiring, increasing investment in technology will
allow firms to grow revenue without necessarily growing headcount.
Technology spending will continue to vary by company size, geography
and IT category, with PCs and servers setting the stage for advanced
solutions across regions."