The Hindu Business Line : Worldwide IT market will expand marginally: IDC

Forecast
IDC maintains strong forecasts in the network equipment category.
It cautions that the PC sales were artificially and temporarily inflated due to demand.

New Delhi April 30 Backed by a strong demand for PCs during the first quarter of the year, IDC's forecast for worldwide IT spending says that the growth would remain unchanged at 6.5 per cent in 2007. However, based on current macroeconomic assumptions and the quarter's data, IDC estimates that the market would expand marginally at 6-7 per cent during the year as compared to a 6.3 per cent growth last year.

"The macroeconomic indicators that gauge the strength and direction of IT spending do not yet indicate that we are headed for a downturn in global IT spending," said the IDC USA Chief Research Officer, Mr John Gantz, in a statement here.

Indian players

According to IDC, "Historically, PC investment is a strong indicator of IT spending sentiment because PC purchases can be easily and quickly postponed in such a scenario. In contrast to this, to gauge the impact on software and services spending would take over a period of several months."

In the case of the Indian IT players, who get a substantial chunk of their revenues from exports primarily to the US, there would be other crucial factors determining their business beyond the economic conditions, said IDC.

"The key issues for the Indian IT export market will lie less in overall worldwide IT market growth and more in the internal dynamics around IT outsourcing, Indian labour supply and competition from other regions," said Mr Gantz, who would be visiting India this week for the first time as a keynote speaker at IDC's 20th annual session for the ICT industry in India.

PC sales

As per IDC's worldwide estimates, the 1992 and 2001 downturn in the IT market was preceded by a sharp drop-off in PC sales. Hence any slowdown would have impacted PC sales during the first quarter of 2007.

In view of the fact that worldwide PC shipments exceeded beyond expectations in the first quarter as well as other factors reflecting IT spending remaining healthy, IDC maintains strong forecasts especially in the network equipment category. However, on the other hand, it cautions that the worldwide PC sales were artificially and temporarily inflated due to consumer demand, which is already softening in the face of decline in real estate prices and energy cost increases.

IDC, however, emphasises on the importance of macroeconomic indicators in the next three to six months. It notes that if the current scenario continues and the outlook for 2008 remains robust, the second half of the year would witness increased business investments. At the same time, if the downside scenario occurs, firms will delay and postpone IT projects in the second and third quarters.