Europe

Citation

Blake, M. (2004), "Europe", The Electronic Library, Vol. 22 No. 1. https://doi.org/10.1108/el.2004.26322aab.001

Europe

Europe

Europe's IT services spending forecast to grow

Europe's IT services spending will grow by 57 per cent from 2003 to 2008, according to a new report by Forrester Research B.V. But the research firm warns that a surge of outsourcing uptake will reshape the whole market, forcing vendors into wholesale reinvention.

"Early predictions of an IT services spending rebound during 2003 have bombed as Europe's major economies remain stubbornly stuck in a low-growth rut", said Forrester Senior Analyst Andrew Parker. "But successful IT services firms between now and 2008 will not rely on a market of booming demand. They will instead carefully match their service offerings to the cost-driven agendas and business-value expectations of clients. Through effective cherry picking among high-growth service categories, a minority of providers will beat the mainly single-digit annual spending growth".

Europe's 8 per cent compound annual growth rate (CAGR) between 2002 and 2008 is moderate by the standards of the 1990s and lower than American IT services spending, which will achieve 10 per cent CAGR over the same period. However, it does show a 3 per cent uplift on earlier predictions during the recession. Forrester predicts that the next two years will see the strongest resurgence of IT services spending – with growth reaching 10 per cent for all services in 2004 and 11 per cent in 2005. A wave of outsourcing spending spurred on by firms' enthusiasm for reducing costs will be the key driver for this growth. Late 2004 and early 2005 will witness a surge of pent-up demand as firms relax the tight spending controls imposed during 2002 or early 2003.

During 2002 and 2003, Forrester found that agile firms sustained revenues by cashing in on an upturn in outsourcing deals. Forrester forecasts that this outsourcing shift will accelerate as European companies look for low-cost IT options, hand off capital IT assets, or seek new pay-as-you-go or value-based outsourcing models.

European online Christmas shopping predicted to total 9 billion Euros

European consumers will spend 9 billion Euros online this year on Christmas shopping, almost as much as US consumers will, according to a new brief by Forrester Research B.V. "Europe is hot on the heels of the US", said Forrester Analyst Hellen K. Omwando. "This Christmas season, Europe's 166 million regular online shoppers will spend 9 billion Euros online – 24 per cent of total online retail for 2003 – compared with $12 billion in the USA. A total of 40 per cent of Europeans shop online, but two countries make up almost two-thirds of all online holiday sales in Europe. With higher Internet shopper penetration than even the USA and with consumers who spend more per online basket than other Europeans, the UK will ring in 3.2 billion Euros (£2.2 billion) in holiday sales, 36 per cent of Europe's total online Christmas sales for 2003. Germany follows with 27 per cent or 2.4 billion Euros".

Forrester reports that the traditional hot online categories will yield 43 per cent of sales this holiday season. Travel will bring in the most money as consumers take advantage of cheap fares – as low as 1 Euro for European flights with Ryanair – to visit relatives or escape to warmer climates. Only 7 per cent of online Europeans shop for replenishment products – but the bottles of claret from Virginwines.com and turkeys from Icelandstore.co.uk add up. Books remain a favourite online purchase for even the most tenured consumers; they will be among the must-gives this season, with consumers turning to the Web for special discount copies of bestsellers.

Compiled by Monica Blake