After a strong demand growth in the IT industry during the second quarter of the calender year 2010, research firm Forrester expects the tech recovery to gain strength in the US though European IT recovery could be lower than earlier predictions. The research firm revised its predictions for the US IT market from earlier prediction of 8.4% growth to 9.9% in 2010 to touch $564 billion and 8.1% in 2011 to touch $609 billion. In the US, computer and peripheral equipment will grow 19.1%, communications equipment 7.2%, software 10.5%, IT consulting services 6.4% and IT outsourcing 6.8% . However, it has retained its prediction for the global IT market which is expected to growth 7.8% to touch $1,580 billion and 8.4% in 2011 at $1,713 billion. Globally, computer equipment is expected to grow 11.6%, software 9%, communications equipment and IT consulting & systems integration services both at 6.6%, with IT outsourcing (now including hardware maintenance and support services) at 4.1%.

Andrew Bartels, VP & principal analyst, Forrester Research, said, “The economic and tech market indicators, are in line with our expectations. However, European economic growth — in large part due to the effects of the Greek debt crisis — has been weaker than expected, and the euro dropped much more against the US dollar than assumed.”

The global predictions have been maintained largely on the back of currency shifts. The euro would continue to strengthen in value against the US dollar as had been the case since the dollar hit its peak in Q1 2009 after the financial crisis. However, the Greek debt crisis and concerns about other heavily indebted euro zone countries. The British pound and other European currencies (such as the Swedish krona) have also weakened against the dollar, the report said.

“A stronger dollar reduces dollar-denominated growth rates because foreign currencies when converted into dollars buy fewer dollars. On the other hand, the Canadian dollar, Mexican peso, and Brazilian real have been strengthening against the dollar, while the Japanese yen and Chinese yuan renminbi have held flat. In these markets, the weaker dollar raises dollar denominated growth rates, as those stronger foreign currencies when converted back into dollars buy more dollars,” Bartels added.

Source:-http://www.financialexpress.com/news/IT-sector-takes-road-to-recovery-in-US–Europe-drags-its-feet/650428/