After a double-digit contraction in 2009, the Croatian IT market grew more than 4% year on year in 2010 as measured in constant U.S. dollars, largely due to a surge in spending on hardware, including PCs, peripherals, and networking equipment, according to a recently published study by international market research company IDC. Spending growth on the Croatian IT market was flat in 2010, measured in current U.S. dollars.

By contrast, software and IT services both contracted as capital expenditures fell across the board and public-sector spending suffered from austerity measures. In spite of this, IDC believes the future for Croatia's IT market looks bright. While IT spending growth will be low this year, it will bounce back, soaring into low double digits through 2014 before levelling off in 2015.

"Basically, the country is still feeling the effects of the crisis," says Nikolina Jurisic, senior research analyst, IDC Adriatics. "It forced companies to look for cost savings in every aspect of their business, but demand for industry-specific solutions is gaining momentum, and new service delivery models will come to the fore as things pick up in a year or two."

Highlights from IDC's recent study include:

• In terms of IT spending, the communications sector was the single largest vertical market in Croatia in 2010. Accounting for 25% of the total market, telecommunications providers invested in ICT – particularly IT services and networking equipment – in a bid to retain clients and win new business in an increasingly competitive environment.
• Banks were the second-largest IT spenders in Croatia in 2010. Core banking solutions at a number of large banks and client-facing service options ranging from mobiles to drive-in banking spurred demand for a mix of hardware and services. The latter in particular will remain a hot area, with annual growth averaging nearly 11% through 2015.
• The home segment was the third-largest segment in terms of IT spending last year. Given the high prevalence of software piracy and a dearth of demand for continual services among home users, the segment was unsurprisingly dominated by hardware, which accounted for almost 90% of spending. Nevertheless, software will remain the fastest-growing segment through 2015, expanding nearly six times as fast as hardware.
• Following a contraction in IT spending in 2011, the government sector will be the fastest-growing vertical market in the future, with entities in the segment more than doubling their IT investment by 2015. The state will continue efforts to modernize its ICT infrastructure and conform to EU standards, while enhancing online services for businesses and citizens.

IDC's Croatia Vertical Markets 2011–2015 IT Spending Forecast (IDC #EVO3T) provides a detailed overview of IT spending trends and forecasts for 17 vertical markets (or sectors) and ten product and service categories in Croatia. The study features overviews of key industry developments, industry challenges, and vertical-specific IT drivers and trends, including tables detailing IT spending by vertical market for each product and service type for the five-year period. Analysis is based on continuous research, the monitoring of end users' IT spending, emerging purchasing patterns, and supply- and demand-side research.

To purchase the study or learn more about IDC research, please contact Tatiana Hinova (thinova@idc.com, +420 221 423 140).