Political uncertainty at home, international financial upheaval, and post-GFC frugality mean 2013 is off to more of a whimper than a bang for information and communications technology suppliers and professionals.
Research house IDC last week cut its 2013 spending forecast for Australian vertical markets from $46.55 billion to $44.9 billion, on the back of a sluggish economy and companies' ongoing reluctance to spend.
IDC predicts compound annual growth for IT enterprise spending of only 3 per cent between now and 2016.
The highest spending of $10.68 billion is expected to come from the banking, finance and insurance sector this year.
While analysts at Gartner crunch their numbers differently, their latest bottom-line forecast is much the same: modest growth of 3.25 per cent in the enterprise IT space. Gartner puts total end user spending at $71.01 billion for the year, including $5.12 billion on hardware, a decline of 5.5 per cent, IT services up 5.2 per cent to $26.97 billion and telecoms flat at $11.81 billion. Software is the only sector set to enjoy a mini-boom, with spending expected to rise 10 per cent to $8.69 billion.
Gartner managing vice-president Ian Bertram said the ICT industry had lived through several years of cautious times.
"There is still spending on projects where there's a substantial ability for them to deliver competitive advantage," Bertram said.
"Everyone has scrutinised - do I need to spend this money? There's been a lot more due diligence.
"People are putting more effort into the business case to justify the spend. People do have some flat foreheads from banging their heads into brick walls [trying to get projects approved]."
Managing director of the listed services company Data 3, John Grant, shares their pain. He said the market was "flat and negative" in parts, with the volume hardware market particularly hard hit. Recruitment and contracting were also in the doldrums.
Data 3, which has annual turnover of about $800 million, blamed a drop in net and pre-tax profits last year on difficult market conditions, including a trend to delay major projects.
"Spending is tight - people are being very diligent about expenditure on projects," Grant said. "The pipeline is strong but conversion is slow."
Chief information officers were facing strategic choices and taking time deciding which way to jump, he said.
"Cloud [computing] represents a major change of tack and we're seeing a lot of deliberation about making the right decision."
ICT suppliers accustomed to more ebullient spending needed to get used to "the new norm", Grant said.
"Global conditions won't change for a long time - governments can't give certainty at the moment."
While industry watchers talk the market down, recruiters are talking it back up.
Ben Wood, the managing director of Clicks IT Recruitment, said 27 per cent of the 200 large organisations surveyed in its annual recruitment and retention survey planned to raise their headcount in the next year.
Last year was a shocker for many in the sector. Stalled projects, government cutbacks and offshoring of work to developing countries left hundreds of technology workers cooling their heels on the bench.
Wood said workers could expect salary rises of 3 per cent, as companies loosen the purse strings and begin hiring again. Demand would be particularly strong from the utilities sector and parts of government, he said.
Peoplebank CEO Peter Acheson said many ICT salaries had been static for the past year.
While the market had been reasonably solid in NSW, Victoria and WA this year, hiring in Canberra remained constrained and South Australia and Queensland continued to experience difficult conditions, Acheson said.