• by Jack Loechner , Staff Writer @mp_research, March 1, 2003

UK Expected to Become Largest European IT Market by 2005

According to a new brief by Forrester Research B.V., the IT technology gap between Europe and the US will grow by 4.5 percent this year. Based on GDP growth projection, historical spending trends, and proprietary research into industry confidence, Forrester's yearly ICT benchmark predicts a decline of 0.4 percent in real terms in Europe's ICT spending.

Senior Analyst Charles Homs said, "By 2004, ICT will only form 6.9 percent of the European economy, compared with 9.6 percent for the US. While Germany will remain the largest European economy for the next three years, its ICT industry won't follow suit.

Based on the most likely scenario for this year, Forrester believes that software revenues will shrink by 2.4 percent, hardware makers will face flat sales, IT (non-telecom) services will experience 1.2 percent growth, and telecom services will lead with 2.2 percent growth. Large software vendors will see growth hovering between 5 percent and 10 percent, but many small services firms and software vendors in countries like Germany and the UK will go out of business. For the hardware market, Forrester projects a shrinkage, while even the best case shows just 1.1 percent growth.

"Sixty-nine percent of the 156 largest European multinationals have headquarters in either France, Germany, or the UK," Homs added. "These large firms still have budgets to spend on IT services like outsourcing and management consulting. And while European telecom remains in the dumps, telecom-related services will outperform the overall technology market, even in the bleakest scenario. Even while telcos struggle with debt and flat revenues, mobile subscribers will increase by 6 percent in Europe in 2003."

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