Survey: Aussie IT industry lacking in confidence

Survey: Aussie IT industry lacking in confidence

The overall sentiment regarding key company performance indicators like sales and profitability growth amongst Australia's ICT industry has deteriorated by about 10 percent over the past year, according to the latest bi-annual KPMG Communications Alliance Industry Pulse Survey.

Communications Alliance CEO Anne Hurley said that although the survey shows less enthusiasm about future prospects than previous surveys, growth and prosperity are still on the horizon for Australia's ICT industry.

"The combination of some recent market consolidation and the uncertain economic outlook are perhaps being reflected in the dampened expectations of some senior ICT executives," Hurley said.

The survey found that while top executives and senior management generally agreed that both the sector and their respective organizations would continue to grow, they have notably lowered their expectations levels over the past 6-12 months.

Respondents with management responsibilities tended to be more optimistic about the future of the industry and their own organization than their professional and specialist counterparts, while hardware and equipment vendors displayed the most pessimistic market outlook.

Software firms and telecommunications providers were the most optimistic about expectations of increased sales and profits.

Competition is likely to remain strong while uncertainty about regulation, innovation and the political environment is expected to increase over the next year.

Head of KPMG's communications group Malcolm Adler said that for the first time in the survey's two-year history, capital expenditure is expected to decline over the next 12 months.

"The message reflects the current state of the capital markets, which is to work existing capital harder rather than seek new funding," Adler said.

The environment received a boost in the survey, thanks to a general belief that green IT will play an increasingly important role, with organizations willing to pay a premium for eco-friendly products and services.

The survey found that on average respondents would be willing to pay an extra 8 percent for green products or services. One in six expressed reluctance to pay any premium whatsoever.

Most survey respondents agreed their customers would increasingly demand green products and services over the next 5-10 years.

On the outsourcing front, Gartner this week released a report indicating a worldwide decline in outsourcing "megadeals," while IT outsourcing services revenue continue to grow locally.

Gartner said that no 'megadeals', characterized as being worth more than US$1 billion, have been reported in the Asia Pacific region since 2003 due to the limited number of companies that represent a viable target.

Research director at Gartner, Kurt Potter, said that the decline in reported outsourcing contracts can be partially explained by the fact that outsourcing is now "business as usual" for many enterprises.

"There is more outsourcing activity, but fewer deals on average are reported and this creates the false impression that outsourcing is decreasing," Potter said.

IT outsourcing services revenue in Australia is expected to exceed $5 billion in 2008, with a compound annual growth rate of 3.5 percent over the next four years.

Australian core business process outsourcing services revenue is expected to hit $2.9 billion this year, with a compound annual growth rate of 5.9 percent over the same period, in line with global trends.

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