UK IT sales set to bottom out this year

Overall IT expenditure is forecast to drop 1.8 per cent this year

IT expenditure is expected to bottom out this year, although growth to 2010 will be minimal, according to a new report by UK IT industry trade body Intellect.

Overall IT expenditure is forecast to drop 1.8 per cent this year, with services expenditure dropping 0.5 per cent. IT consulting revenues will be hit hard and are expected to fall by 5.5 per cent in 2009.

However, Intellect is forecasting that IT expenditure will rise by 0.5 per cent in 2010, with services rebounding faster with growth of 1.9 per cent.

"The UK technology sector can be the cornerstone of economic recovery going into 2010, but there is a danger that the hotter areas, which have a major impact on the wider economy, are at risk of being constrained unless a fit-for-purpose digital infrastructure is brought forward," said John Higgins, director general of Intellect.

"Above all else, next-generation broadband is a platform for innovation and the creation of new business models leading to the jobs of the future."

Hardest hit by the downturn have been freelance staff and contractors, while discretionary IT budgets are also being cut back dramatically, the report finds. Meanwhile, the consumer electronics industry is at its lowest point ever.

Small and medium sized enterprises are also being hit by a lack of credit, according to the report. Government supports are welcome, but the selection criteria means that many firms are not eligible.

But there are some areas of growth. Outsourcing services are performing well, up 3.2 per cent, as are software-as-a-service companies despite an overall downturn in the amount of software sold.

Mobile broadband is showing growth, and public sector spending is holding up well. Higgins said that, if the experience of 2001 is anything to go by, British firms will emerge stronger than before when the economy picks up.