Telcos one-fifth of corporate IT spend

IT spending by Australia's telecommunications sector grew to $1.949 billion dollars in 2003, accounting for 20 percent of the corporate IT spend locally, latest IDC research has suggested.

Kourosh Ghassemi, research director for SMBs, vertical markets and infrastructure, said the IT spend in telecommunications was expected to grow through to 2007 at a compounded annual rate of 7.5 percent.

Companies were likely to spend up on software and services that supported sales management and billing, CRM, integration of CRM and billing, outsourcing and enhancement of network infrastructure, Ghassemi said.

However, cutting costs would probably stay high on the list of priorities, he said.

"Companies in this market are, in the short term, expected to focus on cutting costs more than investing. The need to reduce fixed costs is offering opportunities for outsourcing and pockets of opportunities at the front end, such as analytical CRM and billing systems," Ghassemi said.

Meanwhile, latest quarterly LAN research by IDC reflects that telecommunications carriers have also started spending again in the router market, which IDC found had grown 15 percent sequentially in the first quarter of 2004 and 21 percent more than the same quarter last year.

Susana Vidal, telecommunications analyst at IDC, said that increased penetration of broadband and IP telephony was promoting demand for routers and switches among service providers.

End-users needed to lift their networks' capacity, she said.

Cisco "continued to dominate" in the router market and had recovered market share in switches, but Nortel switch sales had declined as that vendor focused on its voice and convergence strategies, Vidal said.

Meanwhile, Juniper had been able to grab more than half the Gb/Tb router market for the first time in three years. Its T-Series, M-Series and E-Series routers had proven popular with telecommunications operators, she said.

"Cisco and Juniper are now in better position to fight for the Terabit space. The following quarters will show us what the carriers really think of each vendor's technology and business propositions," Vidal said.

Netgear and 3Com had also grown sales at double-digit levels in the quarter, she said.