OECD warns IT firms of tough year ahead

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The latest research by the Organisation for Economic Co-operation and Development (OECD) predicts a tough year ahead for the IT industry.

Joining the growing numbers of analysts and economic bodies painting a gloomy 2009 for tech firms, the international development agency said today that the industry is likely to only have grown by four per cent at most in 2008 compared to the previous year.

But, with the outlook for the global economy worsening and business and consumer confidence plummeting, the OECD’s IT Outlook 2008 report said growth would remain flat or decline in 2009.

“The outlook for the information and communications technology (ICT) sector is much less favourable than in recent years,” it said.

However, some sectors are expected to weather the storm better than others. Spending on software and IT services, including outsourcing, by governments and businesses is predicted as likely to continue.

And internet-related sales and investments in infrastructure, driven by consumer and enterprise demand for high-speed internet, should remain solid although the report acknowledged that some infrastructure investments might get deferred due to the credit crisis.

The semiconductor industry is set to be a big loser, falling nearly six per cent in 2009 according to the report, after weak growth of only 2.2 per cent this year. And semiconductor manufacturing equipment sales, which the OECD report said was a leading indicator for the sector and for IT goods – have plunged.

It also forecast that many other IT sectors, including office computer hardware, would also struggle, having invested heavily in growing business in emerging markets and in new goods and services to boost margins in weakening OECD markets in 2008.

And it found major corporate customers in sectors hard hit by the downturn, such as banking, insurance and retail, were also affecting demand by cutting back spending plans in 2009.

The IT Outlook also analysed ICT trends and developments and concluded that global restructuring of the industry continued in 2007 and 2008. “Asia, Eastern Europe and Mexico are becoming increasingly important as both producers and new growth markets as manufacturers seek to lower their assembly costs of IT goods,” stated the report.

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