It is official: the IT industry is contracting. The Information Age Index, which tracks the financial results of the world’s 200 largest IT companies, turned negative in March, showing shrinkage for the first time in almost six years.
At -0.3%, the growth rate was a sharp dip from February’s 2.3% and a radical change of fortunes from the 10% pace that the industry was running at a year ago.
The financial decline among the subset of the Index companies headquartered in Europe was less dramatic, although it is heading in the same direction. The European Index fell from 4% to 3.1%.
The downward pressure on the index came from all directions. In IT services, revenues dropped at Accenture (-7%) and Computer Sciences Corp (-5%) during their latest quarters; in document software Adobe’s revenues were 12% off; design software companies Autodesk and Mentor Graphics reported an 18% and 15% slump, respectively; and, in networking, revenues were down 26% at Ciena and 5% at Extreme Networks.
But the negative prefix was not evident everywhere. Blackberry maker Research in Motion reported a stunning 84% rise in revenues; open source software company Red Hat showed growth of 18%; data warehouse appliance maker Netezza recorded a jump of 28% in revenues; WAN acceleration company Blue Coat saw a 35% rise; business process management software company Pegasystems posted a 27% jump in sales; and data centre hosting company Digital Realty Trust chalked up a 39% jump in revenues.
Even Oracle, one of the bellwethers of the sector, managed an above-par 2% in its most recent quarter.
However, what is also clear is that the IT downturn is only just beginning. And in coming months, the index is expected to turn increasingly negative.