Indian IT services industry body Nasscom might have cut its FY13 guidance, but there seems to be some hope for the industry. Worldwide enterprise IT spending is forecasted to total $2.68 billion in 2013, a 2.5 per cent increase of projected 2012 spending of $2.603 trillion, according to Gartner.
While a deteriorating global economic outlook in 2012 led to scant overall growth in enterprise IT spending, year 2013 seems to be looking better.
“Our third-quarter outlook points to more substantial growth in 2013, if significant fiscal crises are avoided in the US and Europe, and in subsequent years. Most enterprises have already significantly cut discretionary IT spending growth over the past several years and, barring a global economic catastrophe and significant contraction of operations, they have little room to reduce IT spending further over the long run," said Kenneth Brant, research director at Gartner.
The research and analyst firm expects banking, communications, media and services (CMS) and manufacturing to offer the largest volume of growth opportunities through 2016.
The manufacturing and natural resources sector will lead the vertical markets with total spending expected to reach $478 billion in 2013, up 2.3 per cent from $467 billion in 2012. Manufacturers worldwide have been steadily reducing their IT purchases as a percentage of their sales since the recession of 2008. However, IT spending rates are expected will bottom out in 2013 and will be resilient over the long run, as business confidence is restored and the value proposition of a nexus of new technology forces — social, mobile, big data and cloud — is increasingly championed by senior leaders.
The CMS sector is forecast to grow 3 per cent in 2013 to $426 billion, up from $414 billion in 2012. Firms in the CMS sectors will typically spend approximately 5 per cent of their revenue on IT on average over a five-year period, well above the median for all industries. "Several subsectors within CMS are heavily IT-intensive. With demands for a secure Internet connected backbone and faster wireless data services, coupled with the pervasiveness of social media and video, these industries will need to continue to invest in IT," said Brant.
The banking and securities sector will have strong growth in 2013 and is expected to reach $460 billion in 2013, up 3.5 percent from $445 billion in 2012. Banking and securities is an IT-intensive industry, spending approximately three times as much on IT as a percentage of revenue than the average of all industries. This trend is expected to continue due to a significant amount of IT required to run activities such as lending, payments, trading and risk management.
In 2012, government IT spending is forecast to decline 2 percent and the decline is expected to continue through 2013. In 2013, government IT spending is forecast to total $445 billion, down from $447 billion in 2012.
