European IT industry heads for a slump

The European IT industry slid rapidly towards recession in April and is destined to enter 'negative growth' in the coming few months.

The Infoconomy EuroIndex, the measure of pooled revenue growth of Europe's 100 most prominent vendors, fell to 2.2% in April, down from 7.1% in March. That pace contrasts sharply with the 17% pace of mid-2001, but it is still much more positive than the global IT industry picture. The index of growth worldwide, which tracks the revenue changes at the world's 200 largest technology companies, has been stuck in the doldrums for several months at a depressing -14%.

After a flood of disastrous results at European service companies in March, the latest index was negatively influenced by poor performances at companies spread right across the IT landscape.

Flat numbers came from Finland's primary IT services group, TietoEnator, where revenue growth fell back to 1% in its closing quarter of 2001. Weak demand also plagued smaller companies. Middleware software vendor Iona Technologies, headquartered in Ireland, recorded a 7% fall in quarterly revenues, while Israel's Mercury Interactive – famed for its software testing tools – reported flat year-on-year revenues.

Amidst those sluggish numbers, there was one sector that appears to be unshaken by the recessionary trend. Mid-market business applications software companies, Exact Software and Scala Business Solutions of the Netherlands, and Navision of Denmark posted growth rates of 25%, 15% and 23%, respectively, in their latest financial periods to 31 December.

There were also above par quarterly performances at Paris-headquartered data analysis and reporting software vendor Business Objects (up 9%), UK-based chip designer ARM (up 30%) and German's Internet service giant T-Online (up 30%).

Despite these upbeat figures, the general trend is downwards and the European IT sector, taken as a whole, is likely to fall below the zero line as further weak results appear in May and June.


Infoconomy Euroindex March 2002
Source: Infoconomy

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Ben Rossi

Ben was Vitesse Media's editorial director, leading content creation and editorial strategy across all Vitesse products, including its market-leading B2B and consumer magazines, websites, research and...

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