This document provides readers of this research with an understanding of the state of the Western European software market — currently and in the future. Historically, as part of the IT forecasting process, IDC has always assumed a tight correlation between IT spend and GDP growth — the rationale being that as GDP grows, businesses become more inclined to spend capital, and therefore IT budgets are positively impacted. Obviously the converse is also assumed.
"However, in Western Europe over the last five years, the software segment has shown to be less tightly correlated to GDP growth than the broader IT market in certain circumstances," said Rasmus Andsbjerg, research director, European Software, IDC. "In fact, in economies where there is flat to positive GDP growth and only a somewhat dampened business sentiment, software spend remains remarkably resilient. However, when countries do enter into a technical recession (i.e., two successive quarters of negative GDP growth), the correlation between software spend and GDP increases. This points to the fact that once business sentiment is so negative, companies cannot justify investments in software, irrespective of the benefits it can bring in terms of automation or innovation."