Uncertainty is dampening demand for IT services in UK, says IDC

Market is waiting to see what the government has up its sleeve

Western Europe's spending on IT will rise to £153bn in 2014

Total spending on external IT services in 2010 will be close to £135bn in Western Europe and demand will pick up from 2011 to reach £153bn in 2014, according to research firm IDC.

The figures were published in IDC’s second quarterly revision for 2010 of its Western European IT services forecasts.

Demand in the Germanic and Nordic regions is expected to pick up first, while growth in France and the UK will be slower, said the firm.

Demand in the UK is subject to more uncertainty, as new government initiatives to be announced in the autumn could affect not only direct government spending, but also the overall economy in a manner that would lead to reduced IT services spending in the short term.

"The good news is that the economy seems broadly stable compared with 2009, despite the sovereign debt issue, and enterprises seem to be in a healthier state than last year,” said Douglas Hayward, research manager for European Services at IDC.

“With IT services spend dependent in part on enterprise and consumer confidence, and of course on levels of cash flow in enterprises and government bodies, we see a short-term period of relative stability where things don’t get much better but neither do they get much worse.”

He added that IDC has kept its forecast for the European IT services market essentially unchanged for the third quarter in a row, only making relatively small adjustments to the UK and Greece.

"When looking at services contract signings in the first half of the year, it is clear that the situation is improving, but it takes six to nine months before revenue starts being booked in large scale by the vendors, so we believe a conservative forecast for 2010 is fully justified. We do not see customers enthusiastically opening their wallets yet."