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IT industry to grow in 2012 despite downturn

IT News |  18/01/2012
IT industry to grow  in 2012 despite downturnThe UK's economic recovery has been anything but smooth over the past couple of years. Having existed recession in the final quarter of 2009, growth has been slow and stuttering, with business efforts to drive a sustainable recovery experiencing little success. Uncertainty within the private sector and reduced consumer spending power has had an impact on almost every sector, and IT is not different.

Investment levels have continued to disappoint manufacturers in a number of areas, such as PC and servers sales, as companies and households look to delay discretionary spending as long as possible. But fortunately for the sector, such is the residual demand for information technology that continued growth remains inevitable.

Even during an extended global downturn, businesses recognise the importance of investing in their IT infrastructures in order to add organisational value. With companies finding it difficult to increase turnover in many consumer segments, bottom line efficiencies are needed to drive shareholder value. And despite the need for some capital expenditure and the adoption of a long-term investment view, this is what IT brings to the enterprise.

Businesses recognise that in order to keep up with their rivals and deliver maximum value to the consumer, they must embrace innovation and respond positively to change. The advent of cloud computing, developments in virtualisation and the mobile technology revolution simply cannot be ignored by businesses seeking to attract and retain custom. Modern IT solutions not only help increase efficiencies internally, but they assist in delivering quality service to the end user.

So while the Institute for Public Policy Research believes a double-dip recession is now inevitable in the UK, IT spending growth should continue unabated. Firms are less prepared to sacrifice IT investments than other types of spending, realising that technology not only helps reduce costs but also increase revenues. For an increasing number of businesses, IT is mission-critical and therefore spending remains non-negotiable.

Research firm Gartner expects global IT spending to increase from £2.38 trillion to £2.45 trillion during 2012, an increase of 3.7 per cent on last year. And in the context of international developments this would represent a reasonable year for the industry.

Initially, the analyst predicted a 4.6 per cent increase in spending for this year, on the back of a 6.9 per cent rise between 2010 and 2011. However, external factors such as the Thai floods and eurozone debt crisis have caused problems in the supply chain, forcing a downwards revision.

Richard Gordon, research vice-president at Gartner, explained that the floods will lead to lower hard drive production rates in the short to mid-term. "Thailand has been a major hub for hard-drive manufacturing, both for finished goods and components," he explained. "We estimate the supply of hard drives will be reduced by as much as 25 per cent (and possibly more) during the next six to nine months."

Undoubtedly the natural disaster, panic over the European single currency and faltering economic growth are impacting on IT investment decisions, but the market has too much momentum to simply stop expanding. Too many companies have built their entire business models around IT for this to occur. Obviously, this is good news for professionals seeking employment in the sector during 2012.

While latest unemployment figures suggest that the UK's jobless tally is rising by 1,300 people a day, there is strong demand for computing professionals, particularly those with niche skills. If businesses are prepared to continue spending on IT during difficult times, they want to ensure their investments are in safe hands. By employing IT pros, they expect to achieve a greater return on their technology purchases.

Businesses continue to raise concerns about the IT skills possessed by ordinary members of the UK workforce, and the government this month recognised the need to reformulate the curriculum as a result. Companies are clearly seeking greater IT skills, but the general workforce cannot develop IT expertise overnight. As such, those with existing aptitude will only prove to be more valuable.

2012 may be another difficult year for the economy as a whole, but IT professionals and the industry as a whole should be spared the worst of the downturn.

Posted by Jon Aspinell


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