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IT market: How to survive in an era of crisis

According to  IDC’s assessment, the reduction of the traditional IT market in Ukraine in 2013 was 8% (including telephony, the growth was 3.7%) – with a weighted forecast of 0% a year earlier. Under a moderately optimistic scenario, the fall of the IT market in 2014 will be 25%. This is primarily due to a decrease in the purchasing power of both the state and private clients. In many ways, the current situation resembles the period of 2009, when companies were forced to revise their budgets, and IT in particular, in the direction of current needs – to “survive” here and now.

According to Vladimir Pozdnyakov, IDC Regional Manager in Ukraine, the fall in the IT market in 2013 is due to a fall in GDP of around 1%. A significant role was also played by increased systemic corruption and increased fiscal pressure on business. In addition, in the fourth quarter, due to the socio-political crisis, many purchases were frozen, including government purchases, and large investments in commercial enterprises were also suspended. In general, the volume of the IT market in 2013, according to IDC, amounted to $ 4.121 billion.

According to the company’s forecast for 2014, which takes into account the average annual rate at UAH 11 per dollar, 8% GDP decline, government reforms in the management system, international financial assistance, political stability and in the absence of further territorial losses, the decline of traditional IT the market will be 25% (taking into account telephony – 18%).

Smartphones replace desktops
According to the market structure, the largest drop in 2014 is observed in the “desktops and laptops” segment – from $ 1.4 million in 2013 to $ 900,000. “We expect that the supply of desktops in 2014 will decrease to about 600,000 units, and laptops – approximately to 1 million units, which is directly related to the decrease in shipments due to the accumulation of equipment in warehouses. At the end of 2013, large enough warehouses were formed as for the current level of consumption, and this factor affected the first quarter shipments, ”the expert says.

In addition, the reduction in supply in the PC segment by 33% is associated with a gradual change in customer preferences – Ukrainians are switching to wearable devices (tablets and smartphones). In particular, in 2014 the segment of phones and smartphones will grow from 1.3 million units. to 1.4 million units, the increase in the supply of wearable devices will be 23%.

Most prospects in the segments of IT services (including cloud) and software. According to IDC leading analyst Andrei Golovnykh, the IT services market will fall by 22% in 2014, in 2013 this segment of the market showed a 6% growth. At the same time, outsourcing will remain the most dynamic segment of the IT services market. With the deterioration of the economic background, the growth in demand for outsourcing will increase. “The IT outsourcing market will fall less in 2014. It’s hard for business to invest in equipment, but it must support IT infrastructure, so it will go to IT outsourcing,” Golovnykh said.

According to the company’s forecast, the Ukrainian cloud market will continue to grow rapidly. At the end of the year, a 35% growth is expected – from $ 5.8 million to $ 7.8 million. The key arguments in favor of the clouds are increasing the availability of IT services and reducing IT costs. The cloud services market has entered a phase of rapid growth, and its influence on the IT market will increase. “Technically, it is now much easier to build infrastructure in the cloud and not increase capital expenditures. Today, not investing in IT infrastructure is great. Therefore, there will be even more growth in this segment,” Golovnykh said.

Impact factors
Inflation and devaluation. In 2014, as in the previous year, inflation and devaluation factors will most strongly affect consumer preferences of Ukrainians – consumers will be subjected to very strong pressure on their personal budgets. “This will also affect the redistribution of supplies of devices towards low-end models. If previously models of the average price category were in demand, now demand goes to low-end – to the cheapest models,” says Vladimir Pozdnyakov.

Cloud technology as a lifeline for business
Business will grow IT personnel
The country spends $ 1.5 billion a year on IT people
De-unification According to Pozdnyakov, detenizatsiya, declared by the current authorities, will cover very many volumes of deliveries, and will cause a rise in price of goods by 10%. But detuning, as a negative factor in terms of costs for enterprises and consumers, after 2015-2016. will have a positive effect – a “white” business will a priori consume more IT services and products.

Fight against corruption. The fight against corruption at the state level, according to IDC, is one of the strongest factors that can affect the dynamics of the market. With the departure of the corrupt component, the amount of money to maintain the state system in working condition will decrease, Pozdnyakov says.

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