ICT Council report shows spending to increase on IT

Spending in the IT sector will be robust over the next four years, reaching nearly $45 billion annually by 2010, according to a new report from IDC Canada Ltd. on behalf of the Information and Communications Technologies Council (ICTC).Titled Canadian Information Technology Spending Forecast Summary 2006-2010, the report predicts that spending in the IT sector will continue to be driven by increased investment in IT services with an annual growth rate of 3.6% from 2006 to 2010. The report indicates that annual spending on IT services alone should reach approximately $19.7 billion by the end of this decade. This market is showing signs of maturing, according to IDC, and that is forcing vendors to find new revenue streams. Shifting the focus to the mid-market and selling IT services as a managed service are two areas in which vendors are looking to drive more revenue. IDC also notes that telecommunications service providers are getting into this market as a way to diversify their revenue base. "By entering these markets, they are both competing and partnering with the traditional IT services companies," reads the report. "This is positive news for ICT buyers as it drives increasing price competition, as well as innovative approaches to service delivery." While the IT services segment garners top spot in spending, hardware and software investments are also expected to rise over the next five years. On the hardware side, IDC notes while spending growth will continue, it will slow considerably because much of the latent demand for IT hardware was met in 2005 and 2006. The report predicts that hardware investments will average about 3.5% annual growth, generating nearly $17 billion in spending in 2010. Investments in IT software, while being the smallest of the three in terms of dollar value, represent the highest growth area. The report indicates that spending on software grew to $6.8 billion in 2006, and is expected to top $8 billion by 2010 from an annual growth rate of 4.5%.IDC singles out emerging trends such as software as a service (SaaS) and hosted applications as two of the driving factors behind IT software spending growth. "The hosted applications market continues to have strong growth, while the software-on-demand market has a lot of attention from buyers as an interesting and viable option, including large and medium-sized business," the report states. "This SaaS business model will continue to capture market share, while at the same time increasing the total spending on software as customers find different ways to address business needs with traditional and SaaS delivery options." This IDC report is one in a series of five done for the ICT Council that highlight where IT technology investment is heading and in what specific areas as well as Canadian perspectives on IT outsourcing and enterprise IT and telecom network adoption. The reports will also serve as the foundation for broader discussions on human resource requirements in the ICT sector going forward that will lead to the release of the ICTC Outlook 2012-2015 on Human Resources in the ICT Labour Market, slated for Spring 2008. Telemanagement will continue to monitor the development of the ICTC HR report and will report back on key activities.

ICT Council report shows spending to increase on IT

News | September 14, 2007

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