The IT services market in Croatia contracted in 2010, slipping to a total of $370 million. "This represents a year-on-year decline of 6.1% in U.S. dollar terms and 2.3% in local currency- IDC.
IDC predicts that spending on IT services in Croatia will be flat in 2011, with growth expected from 2012 onward, driven by economic recovery and EU membership.
Following a healthy real annual increase in IT services spending of over 30% in 2005–2006, more moderate, single-digit, growth in 2007–2008, and a modest contraction of the Croatian IT services market in 2009, 2010 witnessed a 6.1% decline. This was due to continued economic malaise and shrinking capital expenditure budgets among the largest IT services spenders – organizations in the telecoms and finance industries - as well as reduced technology investments in the public sector.
The project services macromarket, which includes systems integration, consulting, and custom application development, amounted to $188.66 million in 2010, making it the largest macromarket in the country, with 51.0% IT services market share. However, the segment contracted 10.3% year on year, recording a greater decline than the average for the total IT services market. The support and training services macromarket, the second largest, performed better than the overall market, declining only 1.8% year on year to $111.84 million, representing 30.2% share. The outsourcing services macromarket recorded a total value of $69.46 million in 2010 (18.8% share) and was the least affected, sliding only 0.3% year on year.
Siemens SIS was the leading provider on the Croatian IT services market in 2010. King ICT placed second, followed by Combis, Apis IT, and IBM. The top five vendors combined accounted for less than a third of this highly fragmented market.
On the demand side, the public sector was the largest vertical market in Croatia in 2010 in terms of IT services spending, accounting for 21.7% of the market. The finance vertical market placed second, representing 20.6% share, followed by telecommunications (17.0%) and retail (7.5%). Of these industries, telecommunications saw the most marked decline in IT services spending in 2010, contracting 19.3% year on year. Government IT services spending dropped 10.6%, while the finance vertical saw an 8.8% decline. Conversely, the transportation, retail, and healthcare sectors recorded increases in 2010.
Early available indicators from 1Q11, such as the further deterioration of industrial production and construction with no effective anti-recession measures planned for 2011 and rising food and oil prices, clearly point to such a trend. However, indicators suggest positive developments in the IT services arena that will offset the influence of the adverse macroeconomic landscape.