Continued slowdown in global IT spending

The flimsy economic scorecard of the US and the seemingly incessant eurozone debt crisis are still casting a long shadow on the global IT industry. Western companies cost-cutting measures on one side, it now appears that the IT budgets of companies based in the manufacturing and services-driven developing economies are also under pressure due to depressed demand from the West. Midway through the calendar year, Gartner Inc.-a leading IT research and advisory company based in the US-expects another year of slowdown in IT industrys revenues. In its latest spending outlook, Gartner forecast global IT spending to reach $3.6 trillion in the year 2012, which represents a nominal three percent increase from the 2011 level. A rather decent growth of 8 percent was witnessed in 2011. Putting the latest forecast into perspective, Gartners VP for Research noted: "While the challenges facing global economic growth persist-the eurozone crisis, weaker U.S. recovery, a slowdown in China-the outlook has at least stabilised. There has been little change in either business confidence or consumer sentiment in the past quarter, so the short-term outlook is for continued caution in IT spending." Five categories make up the total IT spending portfolio, with computing hardware accounting for eleven percent, enterprise software eight percent, and IT services 24 percent. Telecom services contribute around 47 percent and telecom equipment vending ten percent. Barring a 10.8 percent growth in telecom equipment sales, no other category is expected to boast more than 5 percent growth in 2012. Notwithstanding a dull forecast, Gartners spending outlook provides some cause for optimism. For instance, enterprise spending on public cloud services is expected to grow from $91 billion in 2011 to $109 billion in 2012, exceeding $200 billion by 2016. With cloud services, rather than setting up their own infrastructure, companies can host their applications and services, and store huge amount of data. Moreover, within the IT services, the demand for technology-based consulting services is expected to remain high due to emergence of analytics and big data-some of the highly lucrative business around. Nearly half of the global IT spending is on account of telecom services, whose growth is expected to slow down from six percent in 2011 to 1.4 percent in 2012. The growth in this $1.68 trillion segment is expected to come from emerging markets, along with increasing adoption of multiple connected devices, like customised tablets and gaming consoles in the West. The slowdown in the international business has impacted Pakistans IT companies, too, with companies like Netsol looking increasingly towards the markets of Asia-Pacific and the Middle East for growth. Indian tech giants, like Infosys and TCS have also felt the heat in recent quarters, but are cushioned due to their diverse clientele and resilience of the IT outsourcing business vis-à-vis the Wests economic woes. However, it is clear that sizable growth in global IT spending seems a far cry until there is a strong US recovery and meaningful resolution of the European debt problem.