IT Spending in CEE – You Can't Keep a Good Sector Down
16 Dec 2013
Prague, December 16, 2013 – The hard economic knocks of the past few years finally appear to be coming to an end in Central and Eastern Europe. As evidence, the IT sector is again healthy. Across the region, pent up demand is being unleashed and closeted projects starting to see the light of day – though end users will proceed with relative caution until their eyes adjust to the brightness of market confidence.
A series of recent vertical market reports and trackers from IDC shed light on the situation. Smartphones and tablets still have shoppers opening their wallets and whipping out their charge cards, making the consumer segment the fastest growing in CEE, with IT spending jumping nearly 10% in 2013.
As the economic environment improves, consumer demand will also have a knock-on effect, spurring IT spending growth in other sectors. The data reveal:
- Retail is rising quickly. Retail floor space is expanding in CEE. Retailers are modernizing stores and equipment, and ecommerce is taking off across the region. In addition to core IT systems, business and supply-chain management solutions, logistics solutions, and networking, retail outlets are also investing in retail-specific systems such as self-checkout, POS terminals, and ecommerce and mobility-based solutions. This will send annual average IT spending soaring to 8.0% over the next few years. In Russia, Ukraine, and the smaller, underdeveloped markets of the Balkans and the CIS, this figure will exceed 10%.
- Manufacturing is going strong. EU member states in CEE continue to provide low-cost manufacturing hubs for Western European producers. As markets improve, IT spending will rise. IDC expects manufacturers in EU member states in CEE to increase IT investments year on year by 5.9% in 2014 and by 5.7% in 2015. Meanwhile Russia, where manufacturing is locally and CIS oriented, will be even more dynamic; IT investments among Russian manufacturers will jump by an annual average of 7.3% through 2017.
- Telecommunications is steady as she goes. Aside from the consumer space, telecommunications is the largest vertical market in terms of IT spending, representing around 14.5% of the total in CEE. Network development and management will account for the lion's share of spending as telcos seek to expand their cloud-based and business offerings. Although IT investment growth in the vertical will be a bit less than 4% annually through 2017, investments in IT services and software (to handle both the backend and innovation in customer relationship management) will post annual average growth of 8%.
- Utilities are powering up. Regulatory frameworks and the push for green energy among European Union member states will give IT spending a boost towards the end of 2014 and in 2015. Meanwhile, modernization projects in Russia – including BA solutions for dynamic billing and power load distribution and smart grid development – will fuel IT investments. The net effect is an energized market, with annual IT spending growth for the sector in CEE expected to be just under 7% through 2017.
As hinted at above, it must be kept in mind that IT investments by a specific vertical market can vary considerably country by country. For instance, through 2017, the average annual growth rate of IT investment by the federal government will be slightly negative in Romania (due to significant budget cuts in 2013 and 2014). In Croatia and Slovakia it will be around 7%, and in Poland it will be a bit less than 4%. By contrast, finance-sector spending in Romania will have an average annual growth rate of 3.4% and 0.5% in Poland through 2017.
For more information about IDC's research into country vertical markets in Central and Eastern Europe, please contact Pavla Cincerova (firstname.lastname@example.org, +420 221 423 116) or Tatiana Hinova (email@example.com, +420 221 423 140).
IDC leads the innovation discussion through events, research, and consulting. For nearly five decades it has been giving IT and business professionals data and insight for making strategic and practical decisions. IDC is a subsidiary of IDG, the world's leading technology media, research, and events company. Learn more at www.idc.com.
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