Recovery tipped for tech sector

Analyst firm Forrester is tipping a strong recovery in the US technology sector, beginning in the final quarter of 2009 and continuing into 2010.

Businesses and governments overreacted to the US and global recessions, it said, because of early fears surrounding the stability of the financial system and the solvency of lenders, and cut needed capital investment in Q4 2008 and the first half of 2009.

“They will restore tech purchasing levels as they realise that the recession is not as deep or as longlasting as they feared,” said Forrester’s principal analyst, Andrew Bartels.

But despite the optimistic outlook, in the short term vendors’ ledgers are looking dire. Forrester pushed its predicted drop in US tech purchasing for 2009 from 3.1% to 5.1%, on the back of GDP shrinkage of 2.8%. Hardware, including PCs, servers and storage, will slip 10% this year as companies stretch their existing equipment to the limit, but will surge back to life in 2010 with growth of 11.7%.

Communication equipment, expected to fall 11% in 2009 after lukewarm growth of 3.6% in 2008, will recover to 6.8% in 2010. Software will fall by 3% in 2009, Forrester predicted.

Licence revenues have already been particularly hard-hit, with declines of 10% to 15% reported. Some of this impact is due to increasing appetite for software-as-aservice (SaaS). Overall growth of licence revenues should recover in 2010 to 7.5%, the analyst firm said.

The surprisingly low growth of outsourcing, currently at just 2% for this year, will start to improve in the second half, reaching 6.5% in early 2010 as deals are implemented, Forrester added.  

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