Recovery delayed for the software and services sector

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Recovery delayed for the software and services sector

Simon Quicke
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The UK software and services sector is set for slow growth over the next decade as the market shrinks with offshoring and cloud computing impacting traditional business models along with the blow dealt by public sector cutbacks.

In a speech given to the Prince's Trust Technology Leadership Group last night the chairman of TechMarketView Richard Holway (pictured) warned that the on premise model was under severe threat and those that could not adapt would disappear.

Added to the impact of offshoring and cloud, which has the ability to reduce revenues for suppliers, there are also public sector cuts coming that will see a reduction in government spending on ICT.

The result is that rather than coming out of a two-year dip this year the software and services sector is going to have to wait until 2012 to see an end to declines in the market.




At the heart of the speech Holway gave last night was the announcement that the analyst house was revising its forecasts for the software and IT services market downwards partly as a result of public sector cutbacks.

TechMarketView will publish its report into the UK software and IT services market next month but has already revealed it has made a revision to the post-recession recovery timetable.

"This has resulted in the largest and most severe reduction in our forecasts in my 25 years as an analyst," stated Holway.

"We are now forecasting that, rather than the three years of decline (in real terms) between 2008 -2010 as in our current forecasts, that run of declines will now extend to 2012. Indeed the forecast return to growth in 2013 is so meagre that even that must be in doubt," he added.

Holway has a track record of being spot on with his forecasts and predicted back in 2002 that ICT growth would be deflationary.



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