Featured on
•
•
A Gartner analysis published in the spring showed that the global IT market is expected to grow by 5.1 percent this year, reaching $4,454.4 billion.
This growth is mainly due to accelerated digitalization in the wake of the pandemic and investment in hybrid working.
However, this forecast is somewhat tempered by the turbulence in the global economy, due to the uncertain outlook caused by the war between Russia and Ukraine, and the recession and inflation in the economies. The impact of these conflicting economic trends and events on the IT industry has also been reviewed by INSPYRE Informatics, a software development company.
"One of the biggest challenges of the current economic situation is the unpredictable impact of responses to emerging issues. This uncertainty is also affecting the decisions of business leaders and the evolution of prices.
Understanding the processes behind the factors that influence prices can help develop the right decision strategy." says Péter Borzák, CEO of INSPYRE.
Factors that increase prices
One of these factors, thanks to the remote working pattern, is the emergence of a large number of US technology companies in the Eastern European market, which has further increased wages and procurement prices in an already tight IT labour market.
As a result, domestic firms now have to compete not only with multinational companies in our country for skilled and talented labour but also with Silicon Valley overnight.
All this, on top with the weakening of the forint, is in itself triggering huge price increases. Remaining on the labour market, Europe's largest IT nearshore markets were the Russian, Belarusian and Ukrainian markets, which have virtually disappeared due to the direct effects of the war and the sanctions imposed, thereby driving up prices.
Of course, we cannot overlook the inflationary effect on prices, which is reflected in higher wage demands in this area.
Among the recent measures affecting the domestic economy, the restriction of the KATA, the a simplified form of taxation in Hungary, is also a price-increasing factor, as many IT professionals have been working as freelancers, so the higher tax burden associated with switching to another form of business will increase purchase prices.
In order to fully understand the impact on the IT market, in addition to the factors detailed above, it is also worth looking at the events and processes behind the components that are causing the price decrease.
Factors driving down prices
Based on current events in the global economy, the question is no longer whether there will be a recession or a crisis, but when and how severe it will be.
In such a period, firms will cut back on non-productive investment, which in turn will lead to falling demand and hence falling prices. In Hungary, the current fiscal austerity is also cooling the market due to
the significant weight of public orders.
Prices are also being depressed by the wave of mowing redundancies in the US market by large technology companies such as Netflix, Google, and Facebook, which, based on experience, are having an impact on the domestic IT market 3-5 months later.
"All in all, these effects are currently known, only these are known, and the only certainty is uncertainty. What is clear, however, is that anyone trying to plan any kind of budget for a multi-year IT project at this time has a very difficult task.
This makes it very difficult to plan costs on the client side and to ensure the long-term stability of businesses on the service provider side."
says Péter Borzák.