Gartner raises 2011 IT growth forecast for the third time this year

In a sign of increasing business confidence, Gartner Inc, the market research agency, has raised its growth forecast for 2011 for the third time due to a stronger-than-expected bounce-back in the IT market.

It’s first guidance, made last year, was for a 3.5% increase in IT spending this year. It hiked the forecast to 5.1% in January this year and further to 5.6% at the end of the first quarter of this year.

Now, with the year half-way through, the agency has again raised the forecast to 7.1%. It is higher than the 5.9% growth seen in 2010, which was considered a good show.

Out of the four components that make up the IT market, computing hardware (PCs, servers, tablets) would grow the fastest at 11.7% this year, Gartner said. It had grown 12.1% last year.

However, around 70% of the global IT spend is on services, with Telecom services (operator and VAS revenue) contributing almost 47% of the total market of $3.6 billion.

From less than 5% growth forecast in January, Telecom will increase its pace of growth to 6.9% according to the latest forecast. This market, including around 500 billion of equipment sales, accounts for nearly 58% of the total IT market.

Similarly, IT services, which makes up around 850 billion (around 22%) of the total market, will grow 6.6%, and not 4.6% as predicted in January.

The new number, which should bring cheers to Indian outsourcing companies like Tata Consultancy Services and Infosys Technologies, is more than double the 3.1% growth seen in 2010.

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