IT industry returns to growth

After a two year recession – the longest and deepest in its 40-year history – the IT industry has returned to growth.

Figures for the Infoconomy Global Index – a measure of the overall growth rate of the world’s 200 largest IT companies – showed a 1% rise in August, up from just below zero in July. The return to the positive stands in sharp contrast with the low-point 18 months ago, when the sector was shrinking at a rate of -14%.

While the global picture may look more upbeat, the situation among the subset of European companies – a group dominated by IT services activities – continues to look troublesome. The Infoconomy European Index for August worsened to -7.9%, down from 7.6% in July.

Outside of Europe, however, strong quarterly results among the industry’s largest vendors fueled the move out of recession – although many US companies’ figures were artificially buoyed by the rise in the value of the euro against the dollar. Microsoft’s revenues grew 11%; IBM’s were up 10% (helped by acquisitions); Intel reported an 8% rise; storage software company Veritas improved sales by 13%; and systems management software vendor Computer Associates delivered 6% better revenues.

Among business intelligence software companies, Cognos turned in a 25% jump, Business Objects’ revenues were up 16%, and MicroStrategy saw an 18% rise.

The trend toward largescale outsourcing of IT also played a part. Offshore outsourcers, Cognizant and Infosys, outstripped all-comers with revenue surges of 61% and 49% respectively. That trend boosted numbers at IBM and Unisys too. IBM showed 10% growth, while business at Unisys was up 5%.

But there were negative influences keeping the index in check – particularly in the once-buoyant business applications software sector. Revenues at Siebel Systems were down 18%, SAP reported an 8% fall, GEAC’s revenues dropped by 14%, business at PeopeSoft was down 7%, and Lawson Software weathered a 15% slump. Another of the industry’s bellwethers also lost ground. Revenues at networking giant Cisco were down 3%.

The overall trend, though, is towards the positive. And in coming months, the IT sector can look forward to a return to sustained, if modest, growth.


Infoconomy 200 August

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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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