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Big IT suppliers will bear brunt of corporate cutbacks

Warwick Ashford

The UK's largest technology and IT services companies are likely to be those worst affected by falling spending on IT by corporates, according to research firm TechMarketView.

The firm found that revenues for UK software and IT services sector to fell to -1% in 2008, compared with 3% growth over the previous four years.

TechMarketView predicts the UK’s IT revenues to fall to -2% in 2009, a decline of £7.4bn, and to show growth only by 2011.

Global purchases of IT goods and services is expected to decline by 3% in 2009, according to Forrester Research.

The demand for new software licences and related IT project services has dropped as big businesses cut non-essential IT spending in the economic downturn.

According to TechMarketView co-founder Richard Holway, the “make-do-and-mend” mindset is likely to affect leading IT companies the most as they are forced to cut licensing costs.

The firm estimates that 80% to 90% of IT budgets are devoted to maintenance and minor upgrades of systems installed in the past four years.

Only companies that depend more on outsourcing or public sector spending, have seen the UK as a growth market in the past year.

Holway expects smaller, leaner companies providing services that cut costs to emerge as winners from the economic downturn.

He predicts that larger companies, such as Dell and Microsoft, will attempt to offset falling revenues through higher-margin revenues from IT services, such as consulting.


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