Concerns in Europe about the reduction of spending on IT services

European IT services have experienced data that was positive. Different organizations from Europe, the Middle East and even Africa invested some $7.6 billion in the second quarter. This hints at the interest in IT services, although all this good news was quickly overshadowed after an ISG report revealed falling numbers that cannot be ignored.

Despite the fact that the demand for outsourcing the ICT infrastructure of companies is high, following this report a slight slowdown. It reflected that, despite such a large investment, comparing the figures with the previous quarter there was a decrease in spending on European IT services.

Could inflation be the cause of this?

Nobody manages to explain the reasons for these worrying data, since demand for IT services remains very high and it does not seem that this will decrease in the short term. Many companies are beginning to rely on the cloud, to go digital and to introduce important technological services for their development and growth. Therefore, the fact that this reduction in spending on these services is inexplicable.

All eyes have turned to inflation for answers. This has not stopped growing, prices are through the roof and society is preparing for the worst. It is perhaps precisely for this reason that this reduction in spending on this type of service is taking place. Despite its importance and its rise, we are all managing costs more rigidly.

This could have been the reason for the slowdown that has attracted attention, although not too much. Despite this reduction in spending on European IT services, it is expected that the situation will not go any further in the short term and that for the following quarter the data will be much better. However, it does not hurt to take this into account in case you really have to start worrying.

What are the expectations?

Despite this slowdown, which can hardly be guaranteed to be due to inflation, expectations about the spending that will continue to be made on European IT services they are positive. The market will continue to demand them and that is why, on the one hand, there is great peace of mind. In addition, we are talking about a slight reduction in spending that can be recovered in the next quarter.

We must bear in mind that the percentage of reduction was 3% compared to the previous quarter. The biggest spending is on infrastructure with some 2.8 billion dollars and on software with 962 million dollars. Very good data that compared to the previous year 2021 have grown a lot. Therefore, although it is convenient to be vigilant, this reduction may only be a small bump.

You can’t always be on the up

Ups and downs are normal, because you can’t always be on the upside. There are times when small variations may appear as is this the case where the comparison reflects a deceleration and a reduction of 3%. It will be necessary to watch that this does not increase later, since this could set off the alarms. But for now, just keep your eyes open.

The current economic situation does not benefit. After attempts to overcome Covid-19, the impact of the war in Ukraine has caused current inflation to escalate. It is a difficult time that is accompanied by an interest in digitization and the addition of new technology to companies.

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