Aussie IT service spend slows amid economic malaise

Analyst firm IDC has cut its projections for growth in the Australian IT services market in 2015, but still expects spending to increase 2.2% this year.

IDC had been projecting 2.8% growth as recently as the first half of 2014 but has revised its projections in part due to cautious IT spending amid uncertain economic conditions.

The company has also attributed the slowdown to declining growth in the IT outsourcing sector, which constitutes around 50% of the total market.

Accelerated uptake of opex-based cloud infrastructure and software-as-a-service offerings instead of capex-based products and services are tapering growth.

Due to the revision the firm now expects the IT services market to grow at a five-year CAGR of 2.4% between 2014 and 2019, increasing from $17.4 billion to $19.6 billion over this period.

“It’s easy for organisations to get caught up in the race to implement emerging technologies. However, organisations must be cautious and carefully analyse how these technologies fit into their existing enterprise IT portfolio,” IDC market analyst for IT services research Prabhitha Dcruz said.

“In this context, establishing a clear business case is crucial to gain success from investments in third platform technologies.”

Image courtesy of Dennis Skley under CC