IT spending in western Europe to reach US$68.6bn

“Total government spending for hardware, software and IT services in Western Europe will increase from US$56.6 billion in 2008 to US$68.5 billion in 2013,” said Jan Duffy, research director, European Government Technology Decision Support, IDC government Insights EMEA.

“IT suppliers who want to capture a share of that growth must take pains to ensure that their service offerings address the need for modern infrastructures and application capabilities, streamlined processes, and a demonstration of cost containment or, even better, cost reduction,” Duffy said.

Although the recession is causing concern vis-a-vis increases in government social costs and decreases in tax revenues, spending on IT remains relatively stable at this point.

The pressure to right size government is likely to become a political issue in some Western European countries, the UK for example, and this could result in increased interest in IT as a way to compensate for fewer staff.

Although there could be a shift in how money is being spent and growth may be relatively slow, IDC says we are unlikely to see a significant slowdown in IT spending in the next few years.

Impact of economic downturn
The effects of the economic downturn are expected to continue through 2010 in Western Europe, easing as the impact of fiscal and monetary stimulus packages becomes more evident.

Despite the recessionary trends, IDC Government Insights expects government-sector IT spending to remain resilient through the forecast period, achieving a 3.9pc CAGR and reaching $58.6 billion in 2010. In comparison with other vertical industries, government is second only to health in the forecast period.

Looking across the three main technology groups (hardware, software, services), hardware spending will suffer a decline in 2010, experience a correction in 2011, but then remain relatively flat through 2013; software spending will experience a small increase in 2010, remaining flat in 2011; IT services spend will increase gradually through 2013.

Public administration and other compulsory activities represent the largest IT spending by central government. As governments make every effort to move the majority of citizen services to an online delivery model, investment across a wide variety of departments, functions and systems will be required.

Top 5 spenders in Western Europe
Amongst the top 5 economies in Western Europe, the UK is the highest spender in 2010. As a group, the big 5 Western European economies will represent some $36.8 billion in IT spending in 2010. Germany is the highest spender after the UK, followed by France, Italy and then Spain.

Although the forecast growth in the government sector has been affected by the economic crisis, it is still a relatively stable and growing market with some healthy growth in specific submarkets.

Article courtesy of siliconrepublic.com