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What a Difference a Year Makes!

by Staff Writers •
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The headline in The Medium after the 2007 Federal Budget was Budget Bonanza for Hot Federal ICT Market. What a difference a year makes!

This time last year, we reported on an expansionary (pre-election) budget that came on the back of an already hot ICT market. Based on Intermedium's analysis to that time of the 2006-07 financial year, we predicted that it would be a big-spending year.

In the lead-up to the May 2008 Federal Budget, we're now predicting a tough budget for the ICT market. Even though many of the cuts to ICT spending, and changes to procurement will occur after the budget, general cuts to government spending will impact demand for ICT.

Intermedium's research based on ICT contracts reported by Federal agencies shows that spending is definitely down in the current financial year. A comparison of contracts reported during the first six months (July - December 2007) shows that the value of ICT contracts is down almost 23% compared with the same period the previous year. In fact we have to go back to the first half of the 2003-04 financial year to find a lower value of ICT contracts reported.

Looking forward, Intermedium expects that the outlook for the Federal ICT market for the remainder of 2008 will be slow. ICT cuts (including some that will be announced in the Budget) now appear certain, but these cuts will not impact all sectors of the market in a uniform manner.

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