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Industry sustains robust growth rate

The IT industry – at least for the time being – seems to be riding the credit squeeze. In August, the Information Age Index, which tracks the performance of the world’s 200 largest IT companies, stayed within the 10-11% growth band it has exhibited over the other summer months.

At 10.9%, the performance of the US-dominated global index was actually a rise on July’s 10.3% level; and, just as surprisingly, the subset of European companies tracked maintained their group revenue growth rate at 6.8%.

But many of the strongest influences came from neither the US nor Europe. The major Indian outsourcing companies reporting in August all turned in high positive results. Revenues at Wipro and Infosys were up 43% and 20% respectively in their latest quarters. Cognizant, which is US-headquartered but employs the same business model, grew revenues 33%.

In contrast, there was a mixture of fortunes among their European rivals. The UK’s Logical, which has created a healthy blend of onshore, nearshore and offshore IT project delivery, and coupled that with a well-executed acquisition strategy, showed revenue growth of 16% in its first half to 30 June. Deutsche Telecom’s T-Systems subsidiary, on the other hand, kept the European growth rate in check, with a 10% drop in revenues during its second quarter of the year.

There were several companies reporting $1 billion-plus quarterly revenue figures that exerted a downward pull on the overall growth rate. Sun Microsystems saw revenues shrink 1% in its closing quarter of 2008 to the end of June, while Nortel Networks and Colt could only manage 2% growth.

However, those were not enough to dent the sector’s strength, and forward indicators suggest little erosion of that position in the months ahead.

The Information Age Index measures the overall growth rate of the IT industry by tracking the financial results of the world’s most important publicly listed IT companies.