Forrester Reforecasts IT Market Outlook

Software sales and systems integration projects are expected to be robust in the remainder of 2010, but the overall outlook is headed a tad downward based on overall global economic caution and meager U.S. GDP growth.

Technology research analyst Forrester has revised the global information technology market outlook forecast to 8.1 percent for the remainder of 2010 from a previous forecast of 9.9 percent. The trending is downward as the U.S. economy grows "at a snail's pace," yet it is characterized as "still robust" by Forrester analyst Andrew Bartels. The forecast for 2011 is 7.4 percent.

"Looking ahead to the next few quarters, I do think that computer equipment vendors have already seen the best growth for the year, with growth rates shifting down into single-digit rates in 2011," wrote Bartels on his Forrester blog. "Communications equipment vendors face choppy waters, with strength in enterprise demand for unified communications and videoconferencing, weaker demand from carriers in the U.S. and Europe (but still strong in emerging markets), and new competition as computer equipment vendors like HP get into the market."

Spending in several IT categories is expected to expand, particularly in computer equipment, which is at a healthy 19 percent clip for the year. Software purchases are expected to grow by 9.1 percent--most notably in applications ($97 billion), middleware ($53 billion), custom applications ($41 billion) and operating systems ($11 billion).

Systems integration and technology consulting businesses will see a large percentage of the IT services market in 2010 with more than $73 billion being spent. IT outsourcing captures $95 billion of the IT product and services market with $26 billion going to distributed environments, $14 billion to application outsourcing, $13 billion to desktop outsourcing, $6 billion to network and a whopping $19 billion to mainframe outsourcing.

"As software purchases pick up, IT consulting and systems integration services revenues will also rise (Infosys today reported a 37 percent increase in project-related revenues in calendar Q3, and Accenture earlier reported 6 percent growth in its project revenues in its quarter ending in August 2010)," wrote Bartels. "Revenue growth for IT outsourcing will lag the growth in IT consulting and systems integration (already reflected in both Accenture's and Infosys' revenues), while telecommunications services revenues will start to turn positive in 2011."