IT services defy the downturn

Despite continued threat of credit crunch, IDC predicts IT services revenue will rise over the next five years

Europe’s IT services market is set to grow 4.8 per cent in the next five years according to the latest figures from IDC.

And despite the economic downturn this year, the analyst predicted that services spend will increase by five per cent in 2008.

The downturn is likely to hit in the fourth quarter of 2008 after going largely unnoticed in the first half of the year, IDC claimed. The UK, Ireland and Spain is the most likely to feel pain, due to the continued deterioration of the housing market and GDP growth.

IDC also predicted that consulting and project engagement will be the most affected by the crisis, but outsourcing will increase as enterprises try to reduce costs. Despite expecting the downturn to last until 2010, the analyst said the effect on the IT services market will remain ‘limited’ because the market has not been led by over investment as in the dotcom crisis.

Laura Converso, research manager of European software and services at IDC, said: "As the European economy cools, the outsourcing segment continues to be the growth engine of the IT services market. Even though we adjusted the growth expected in consulting and project engagements downwards for 2008, due to the effects of the downturn, the growth we expect in the application development market and the estimated higher growth in the IS outsourcing market more than offset the downward effect of the crisis."