Software and services market still in decline

The UK software and services market faces a second year of decline in 2003, according to a report by Ovum Holway. It forecasts a decline of 3% in real terms (excluding inflation) to £22 billion in 2003, following a fall of 4% in 2002. These figures reflect the fact that many organisations are using their IT budgets to improve and prolong the life of their existing systems, rather than invest in new ones.

The hard times look set to continue. “Last year we warned the industry that it was in denial when talking about ‘when market conditions improve’,” says Anthony Miller, research director at Ovum Holway. “Things will get better when they stop getting worse – and we think that won’t be until next year.” The company expects software and services industry growth rates to remain below GDP growth until 2006 or later.

  • The business process outsourcing (BPO) sector, however, continues to grow. Gartner expects the worldwide BPO market to grow 10.5% to $122 billion in 2003, up from $110 billion in 2002. It says this is because more businesses are focusing on core business processes, and outsourcing non-core activities. Gartner expects the North American market to show moderate growth in 2003, after several years of double-digit figures, but Europe and Asia will outpace it. It forecasts growth of 10.9% in Western Europe in 2003, and although it only forecasts 7.8% growth in the Asia/Pacific region for 2003, it expects double-digit growth in the next few years.

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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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