Russian conflict unlikely to harm global ICT spending, yet

But uncertainty, supply, power woes could cause trouble ahead


Even without Russia's small drums, the tech investment beat goes on

The tech market has plenty of problems to contend with in 2022 and beyond but demand is not currently one of them. What is complicating prognostications for the wider global ICT market, along with the known quantities (inflation, supply chain bottlenecks, etc.) is the Russian-Ukrainian conflict.

With no market potential left in Ukraine for the near term and a rapidly dwindling list of tech companies to deploy in Russia, it might be tempting to think the ripple effect of those losses will be large. But some perspective is needed, especially as we watch Russia scrambling to cobble together parts for future systems, not to mention rush to find adequate replacements for enterprise software and support packages.

As IDC associate research director, Andrea Siviero, tells The Register, "the Russian and Ukrainian markets together account for only 5 percent of European ICT spending and 1 percent for overall spend. Russia is about $51bn of that and Ukraine around $5bn.

In other words, on paper, the global ICT spending hit is a bit of a drop in the bucket. In the "before times" this might have caused some waves but the situation is far more complicated.

The real problem is the Ukraine crisis introduces yet another layer or uncertainty in a market that is eager to invest but not sure what risk really means. Historic levels of inflation, persistent supply chain bottlenecks (the kind that put vendors at the mercy of a small, cheap component) and now a looming energy cost crisis. It's a lot.

Siviero tells us that the impact of this is clear in recent mini-polling from IDC showing 57 percent of global companies are monitoring and reassessing their technology spend but only 10 percent say they will make an adjustment.

In addition to showing us that no one knows what in the hell to do in these times, he adds "the demand is still there but this is a scenario where overall spend is flourishing with double-digit growth before the war but the new elements, inflation, energy consequences from Russia, and so on make this even more complicated."

In other words, the analysts don't know either. And that is perfectly fine for the tech market anyway since ICT spending is still gangbusters, despite compounding woes.

There is a gleaming bright spot in all of this, especially in the West. Siviero says despite double-digit contraction of the market in Russia and nearby countries, "tech spending among Western European countries will likely increase in part due to expanded defense and security allocations."

The thing to keep an eye on is actually the currency drops and tech markets. Luca Butiniello, research analyst for the firm's European arm tells us "currency fluctuation and tech spend fluctuation make predicting the direction of spend even by the end of 2022 difficult to predict."

"Russia's currency plunged in value in response to the initial sanctions, making imports of IT equipment and services significantly more expensive. As a result, many companies are refusing to ship orders to Russia even if payment is possible. This also means that Russia's own manufacturers of PCs, servers, and communications equipment will be unable to operate. Geopolitical tensions are also impacting other currencies throughout the region, including the Euro".

Meanwhile Philip Carter, IDC group vice president for Worldwide Thought Leadership Research, told companies they would be wise to set up contingency plans sooner rather than later.

"Given the fluid nature of the conflict, IDC recommends that companies identify weak links in their value chain ecosystem, develop agile supply chain strategies, and create action plans that enable them to anticipate and react to a range of disruptive market movements," said  ®

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