Technology: IT Industry Still Not Recovered, but Poised For Solid Growth in 2011

Both Gartner and Forrester are predicting a continued growth in the IT industry for 2011.  Of the two reports, the Forrester prediction seems to be the more optimistic.  Gartner sees IT growth being measured more as a result of  currency fluctuations than of substance.

Andrew Bartels, Forrester Research vice-president and principal analyst, made three predictions for IT in 2011:

1.  Forrester predicts 7.1 percent growth in worldwide IT revenues in 2011, nearly identical to the growth experienced in IT in 2010.  But 2011 will be different in that a stronger economic base will be driving growth this year, rather than the spending in 2010 which was driven primarily from pent-up demand from purchases that had been delayed in the two previous years because of the poor economy.

2. Hardware sales have so far led the growth figures, but growth in software and professional services is expected to follow, and large service projects take months to complete.  Forrester predicts that hardware and software sales in 2011 will lead to an even stronger year for IT revenues in 2012.

3. In 2010, global IT growth was led by Latin America, Eastern Europe, the Middle East, and Africa.  In 2011, Forrester is predicted more evenly geographically distributed global IT growth, with sales picking up in North America, Europe and Asia Pacific regions.

Richard Gordon, research vice president at Gartner, forecast that global IT spending will rise by 5.1 percent this year to $3.6 tillion.  That is compared to growth in IT measured by Gartner of only 3.6 percent in 2010.  But Gordon tempers his forecast with this information:  “Lest we get over-excited, it’s worth noting that much of this rise is due to currency exchange rate fluctuations that are routinely factored into our forecast. In fact, of the 1.6 percentage point increase in U.S. dollar-denominated IT spending growth, 2.0 percentage points of the gain (i.e. more than all of it, if that makes sense!) comes from U.S. dollar devaluation.”

Some sectors within the IT space are seeing more robust growth.   Network Security is one example.  A report from  ABI Research finds that “in 2009, we saw some dips in network security spending across the board,  but the market showed remarkable resilience in 2010, growing 11 percent, to pass $6 billion, and  we expect steady growth in 2011.”