The UK software and IT services (SITS) market will not return to growth until 2016 at the earliest, according to a report from market watcher TechMarketView.
TechMarketView estimated that the UK SITS market shrank by 3% in 2011, marking the fourth year of market decline in a row.
"With the deepening economic crisis in Europe affecting markets worldwide, and with downbeat UK GDP growth forecasts, we have had to take an even more pessimistic (we would say realistic) view of the prospects for the UK SITS market," TechMarketView said in the report.
TechMarketView’s Anthony Miller said that IT innovation such as virtualisation and cloud computing allow buying organisations to do more with less, meaning that IT spending will lag behind overall economic growth.
"The technology trends, virtually anything you care to look at, have a net deflationary effect on IT spending," Miller said. "IT will tend to deliver better value, and adoption won’t be quick enough to mitigate that lowering value. Price performance, whether it’s hardware, software or services, is getting sharper.
"There’s no new money going into IT," he said.
Miller noted that there are some areas of enterprise IT that are growing fast: mobile computing, social media and cloud computing. However, he said that those areas would tend to grow in ways that took revenue from other areas of the SITS market, reducing the need for laptops and desktops, and in house, high-value IT products.
"When we speak to the captains of industries, they are very frank and honest in agreeing with our views, which they would never do in public," Miller said.
TechMarketView’s forecast comes after it found that the total SITS market was worth $3.39 billion in 2011, down from $3.42 billion in 2010. HP remained the UK’s top SITS supplier, but with showing much stronger growth from second place.