A forecast return to relative economic stability has meant IDC is keeping its forecast for Western European IT services unchanged for this year, with demand set to pick up in the Nordics first.

IDC’s second quarterly revision for 2010 of its Western European IT services forecasts estimates that total end-user spending on external IT services in 2010 will be close to US$204bn in Western Europe, and that demand growth will pick up from 2011 to reach $232bn in 2014.

IDC revises its forecasts each quarter in the light of economic and industry trends, and its forecasts are in constant currency, thus excluding the effects of currency movements.

Demand in the Germanic and Nordic regions is expected to pick up first, while growth in France and the UK will be slower. Demand in the UK is subject to more uncertainty, as new government initiatives to be announced in the autumn could affect not only direct government spending, but also the overall economy in a manner that would lead to reduced IT services spending in the short term.

IT services defined

IT services include project-oriented services (such as IT consulting, systems integration and custom application development), outsourcing services (such as data centre outsourcing and application management), and support services (such as IT training and hardware and software deployment). IT services exclude business consulting and business-process outsourcing (BPO).

“The good news is that the economy seems broadly stable compared with 2009, despite the sovereign debt issue, and enterprises seem to be in a healthier state than last year,” said Douglas Hayward, research manager for European Services at IDC in London.

“With IT services spend dependent in part on enterprise and consumer confidence, and of course on levels of cash flow in enterprises and government bodies, we see a short-term period of relative stability where things don’t get much better but neither do they get much worse.

“We have kept our forecast for the European IT services market essentially unchanged for the third quarter in a row, as far as the big picture goes, only making relatively small adjustments to the UK and Greece,” Hayward said.

IDC surveys of end users earlier this year showed spend confidence starting to return, with growing interest in outsourcing and cloud computing, for example, but the reality at the coalface is that IT services vendors typically reported falling IT services revenues in Q1 2010 and IDC expects this also to be the case for Q2 2010.

“We expect that demand and vendor revenues will revive in Q3 and Q4 of 2010, so that IT services spend for the full year will end at same level as 2009,” said Hayward.

A return to demand

“We have not been expecting a return to demand growth until the second half of this year, and there are many signs that we were right not to do so. When looking at services contract signings in the first half of the year, it is clear that the situation is improving, but it takes six to nine months before revenue starts being booked in large scale by the vendors, so we believe a conservative forecast for 2010 is fully justified. We do not see customers enthusiastically opening their wallets yet,” Hayward said.

All major countries in Europe face public-sector debt issues that are likely to lead to cuts in IT spending in the public sector in 2011, but in the longer run IDC expects that the possible efficiency gains and cost savings promised through outsourcing will lead to increased outsourcing demand in the European public sector.

This is especially the case where vendors offer new payment models that allow the customer to spread its investments over the full contract length. Nevertheless, in the near future, IDC expects that governments will need to make immediate savings and will chose the “easy option” of cutting down IT spend instead of transforming IT spend.

Source:http://www.siliconrepublic.com/news/item/16895-us-204bn-european-it/

The European debt crisis would not hamper the Indian Information Technology business and the current (IT) environment is expected to be much stronger than in 2009, a top official of US based Nasdaq listed IT firm Syntel International said on Saturday.

‘I dont expect it (debt crisis) to hamper..I expect the environment to be much stronger than in 2009. However, it will take some time for people to reconcile with what has happened in Europe. The crisis has, however, left some question marks,” Syntel International CEO and President Prashant Ranade said.

“There are some question marks about the situation in Europe….while demand is firming up, customers are thinking about releasing the projects and a cloud of uncertainity relative to Europe has got people thinking…we will just keep watching it and see how it unfolds’, he said.

Syntel, he said, has posted a stronger growth in the first quarter of 2010.

Ranade was speaking to reporters at the inauguration of Syntel’s second global development centre at SIPCOT-IT Park at Siruseri near Chennai.

He said the company would invest $50 million to develop the Chennai facility, which has 10,000 seating capacity.

“This will be one of the two major centres in India..after our Pune centre. The second phase of Chennai and Pune facilities are expected to be completed in two years”, Ranade said.

To a query, he said Syntel would invest close to the same amount at Pune. Besides these two facilities, they planned to set up two facilities each in Tirunelveli and Madurai,he said.

Syntel International General Manager and Administration Head N Saravanan said Electronics Corporation of India has alloted 25 acres for the Madurai and Tirunelveli facilities.

“It is in the initial stage.. we will be going there as a co-developer (along with ELCOT)”, he said.

Tamil Nadu Deputy Chief Minister M K Stalin,who unveiled a plaque to mark inauguration of the facility,welcomed Syntel’s idea of setting up facilities in Madurai and Tirunelveli, at a time when Tamil Nadu planned expand its IT business in Tier II and III cities.

Citing a department of Information Technology report, he said the industry has grown from $10.2 billion in 2001-02 to $58.7 billion, with a CAGR of 26.9 per cent.

He called upon IT companies to work with the Government in implementing the recently announced e-waste policy.

Early this month, Tamil Nadu IT Minister Poongothai announced the policy in the assembly. It would work towards minimising e-waste generation, utilise generated e-waste for beneficial purposes through reuse and recycling and ensure environmentally sound disposal of residual waste.

Source:http://beta.profit.ndtv.com/news/show/european-debt-crisis-to-not-affect-it-biz-syntel-54041

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“It is particularly important to achieve a balance between enhancing the business continuity and the parallel reduction of operating IT costs,” emphasized A. Gailitis. According to IDC, the annual increase in volume of data is more than 80%, while IT costs are increasing only by 20% per year. “IT service with the latest IT technologies should become an engine of business and help increase revenue. Our recent SAN solutions cope with this task. For example, the disk space capacity of 50 gigabytes costs a little more than 29 EUR”, said A. Gailitis.

Source:http://www.newdesignworld.com/press/story/66092