United Kingdom Information Technology Report 2022

Q1 2022
www.fitchsolutions.com
Unit
United
ed Kingdom
Inf
Informa
ormation
tion T
Technology
echnology R
Report
eport
Includes 5-year forecasts to 2025
EMISPDF tr-bogazici-demo from 193.140.201.95 on 2023-04-04 09:07:31 BST. DownloadPDF.

Downloaded by tr-bogazici-demo from 193.140.201.95 at 2023-04-04 09:07:31 BST. EMIS. Unauthorized Distribution Prohibited.
United Kingdom Information Technology Report | Q1 2022
Contents
Key View............................................................................................................................................................................................ 4
SWOT .................................................................................................................................................................................................. 6
Information Technology SWOT............................................................................................................................................................................................... 6
Industry Forecast........................................................................................................................................................................... 7
Industry Risk/Reward Index ....................................................................................................................................................12

Economic Recovery Slightly Improves Europe's IT Market Growth Prospects ..................................................................................................12
Market Overview..........................................................................................................................................................................15
Industry Trends And Developments .....................................................................................................................................25
Competitive Landscape.............................................................................................................................................................31
United Kingdom Demographic Outlook...............................................................................................................................35
Information Technology Methodology.................................................................................................................................38
© 20
2021
21 Fit
Fitch
ch Solutions Gr
Group
oup Limit
Limited.
ed. All rights rreserv
eserved.
ed.
All information, analysis, forecasts and data provided by Fitch Solutions Group Limited is for the exclusive use of subscribing persons or organisations (including those
using the service on a trial basis). All such content is copyrighted in the name of Fitch Solutions Group Limited and as such no part of this content may be reproduced,
repackaged, copied or redistributed without the express consent of Fitch Solutions Group Limited.
All content, including forecasts, analysis and opinion, has been based on information and sources believed to be accurate and reliable at the time of publishing. Fitch
Solutions Group Limited makes no representation of warranty of any kind as to the accuracy or completeness of any information provided, and accepts no liability
whatsoever for any loss or damage resulting from opinion, errors, inaccuracies or omissions affecting any part of the content.
This report from Fitch Solutions Country Risk & Industry Research is a product of Fitch Solutions Group Ltd, UK Company registration number 08789939 (‘FSG’). FSG is an
affiliate of Fitch Ratings Inc. (‘Fitch Ratings’). FSG is solely responsible for the content of this report, without any input from Fitch Ratings. Copyright © 2021 Fitch Solutions
Group Limited.
THIS COMMENTARY IS PUBLISHED BY FITCH SOLUTIONS COUNTRY RISK & INDUSTRY RESEARCH and is NOT a comment on Fitch Ratings' Credit Ratings. Any comments or data included in the report are solely
derived from Fitch Solutions Country Risk & Industry Research and independent sources. Fitch Ratings analysts do not share data or information with Fitch Solutions Country Risk & Industry Research.
fitchsolutions.com
EMISPDF tr-bogazici-demo from 193.140.201.95 on 2023-04-04 09:07:31 BST. DownloadPDF. 3
Key View
Key View: As the economic rebound that followed Covid-19 vaccine rollout loses momentum, the UK's IT market will settle towards
a slower rate of trend growth over the medium term. Nonetheless, vendors will be able to target strong demand for cloud services
and digital transformation solutions across a host verticals, and overall IT market growth is forecast to outpace GDP for the duration
of the forecast period to 2025. Pandemic-related downside risk has not entirely diminished because of the threat posed by virus
variants and potential for further supply chain disruption. The UK's IT market faces additional uncertainty because of the ongoing
Brexit process, with the future of the most important vertical for the IT market - financial services - not covered by permanent
provisions in the EU-UK Trade and Cooperation Agreement.
Uncertainty Hangs Over A Positive Core Scenario

IT Forecast Breakdown (United Kingdom 2019-2025)
f = forecast. Source: Fitch Solutions
Latest Updates And Industry Developments
• The IT market in the UK contracted by 1.5% in local currency terms in 2020, but then rebounded strongly in 2021 with growth of
9.5% because of the wave of household consumption and private sector investment that was unlocked by the successful rollout
of Covid-19 vaccines. The year-on-year improvement was more pronounced in US dollar terms because of the tailwind from
sterling appreciation, from a contraction of 1.1% in 2020 to growth of 19.5% in 2021.
• The pandemic had a powerful effect on product level trends in the UK IT market. The most direct impact in the hardware
segment was the surge in notebook and tablet demand when lockdowns pushed large numbers into remote work and study.
Meanwhile, in the software and services segment this operational disruption acted as an accelerant for existing trends towards
cloud computing models and for digital transformation strategies.
• The closure of non-essential physical retail halted in-store computer hardware purchases over April to June 2020, but the
developed nature of the e-commerce industry in terms of infrastructure and adoption in the UK mean the online channel was
able to partially compensate. Meanwhile, the IT services market faced a bottleneck during lockdown because of a loss of site
access, with functions that were unable to be completed remotely the worst affected.
fitchsolutions.com
• In terms of the local IT industry, firms in the UK proved relatively successful at adapting to the Covid-19 pandemic, with workers
in research and high-value services roles suitable to remote or hybrid modes of working. The main hardware activity of wafer
fabrication was adaptable to social distancing because it already took place in clean room environments.
fitchsolutions.com
SWOT
Information Technology SWOT
SWOT Analysis
Strengths • One of the largest IT markets in the world, especially for IT services where there is a deep public and private
sector market.
• High-quality supporting infrastructure, including fixed and wireless data networks, logistics, and retail.
Weaknesses • High levels of uncertainty surround the ongoing Brexit negotiation process, and its impact on domestic
politics that result in delayed and deferred private sector IT investment.
• Maturity of hardware market means diminished volume growth potential, while migrations to cloud are
affecting in-house enterprise infrastructure demand.
Opportunities • Medium-term sterling appreciation will increase the local currency affordability of imported hardware and
software solutions that are traded in US dollar terms, which will add momentum to the IT market rebound as
pent-up demand from during the pandemic is tapped.
• Led by Apple's move away from Intel, custom silicon designs in PCs will open new design possibilities and
enable new pricing strategies.
• The acceleration to cloud computing and digitisation strategies as a result of the pandemic has put the
software and services market on a faster growth trajectory, and will also generate investment in data centre
capacity expansion.
• Other areas of adoption and innovation over the medium term will include advanced automation and
assistance solutions that utilise cloud and edge computing, Internet of Things, machine learning and data
analytics, robotics and 5G.
• Further spikes in Covid-19 infections that require a public health policy response and so lead to a shallower
Threats or delayed economic recovery.
• Shifts in consumer behaviour post-pandemic, such as general consumption caution, or a shift back towards
services and away from physical goods once the domestic hospitality and international travel re-opens fully.
• Chip shortages that extend into 2022 and force consumer electronics device assembly operations to be
halted, or cause price rises that have to be passed through to consumers.
• The ongoing Brexit process and unaddressed questions such as Scottish independence and the future of
key services industry sectors under the EU-UK Trade and Cooperation Agreement could prove a vulnerability
during global disruptions that occur as part of the pandemic recovery.
fitchsolutions.com
Industry Forecast
Key View: Medium-term IT market growth in the UK is forecast to be below the level reached in 2021 during the immediate
rebound from the acute phase of the Covid-19 pandemic. The outlook is however still a positive one, with major opportunities in
cloud computing and digital transformation solutions, and IT market growth is forecast to outpace GDP throughout the forecast
period to 2025. The rollout of vaccines improved the risk profile in 2021, but there are still pandemic risks in virus variants and
supply chain issues, which in the case of the UK could exacerbate economic strains stemming from the ongoing Brexit process.
2022 Outlook
The growth rate of the UK IT market is forecast to decelerate slightly in 2022 as the strong recovery as the economy emerged from
the acute phase of the Covid-19 pandemic begins to lose momentum. IT market growth will nonetheless remain strong, above
trend and exceeding the GDP growth rate in 2022. We forecast that the IT market will grow by 8.4% in local currency terms in 2022
to GBP176.0bn, with a US dollar growth rate of 11.5%.
Economic trends will be a positive factor for the IT market in 2022, with above trend GDP growth forecast due to the combination of
consumption and investment momentum as the UK economy moves beyond the acute phase of the Covid-19 pandemic. There
will also be a tailwind from sterling appreciation against the US dollar that improves import affordability, though this trend will make
a smaller contribution than in 2021.
Risks are still skewed to the downside, and the UK is more vulnerable than most developed economies to disruption caused by the
Covid-19 pandemic and recovery in 2022 because of the additional strain placed on businesses and supply chains by the ongoing
Brexit process. There is also an unknown around the extent to which consumption trends will swing back towards travel and
domestic hospitality after restrictions are removed and as confidence returns.
Computer hardware spending growth momentum will cool in 2022 after the boom in notebook and tablet demand that occurred
during lockdowns in 2020 and 2021. PC demand is not forecast to drop back to pre-pandemic levels though, especially for
notebooks, because the adoption of hybrid work models means the market is on a structurally higher volume trajectory.
There will be several forces at work in the UK software and services segment in 2022. On the positive side, there is lasting
momentum for cloud computing services and digital transformation in the public and private sector because of the pandemic
experience on operations and relationships with customers. There is however also uncertainty surrounding the investment outlook
of key sectors for the IT market, such as financial services, because of the ongoing Brexit process and the lack of permanent
provisions for UK services exports in the UK-EU Trade and Cooperation Agreement.
fitchsolutions.com
Industry Trends - IT Market

(2019-2025)
Market Drivers
In our core scenario the UK IT market will experience a tailwind from consumption and private sector investment led GDP growth
over the medium term, as well as sterling appreciation against the US dollar that increases the affordability of hardware and software
imports. However, GDP growth rates are expected to decelerate over the medium-term as the short-tem bounce following the
acute phase of the Covid-19 pandemic loses momentum.
The combination of economic growth combined and sterling appreciation will be a positive for retail computer hardware demand.
Purchasing power gains will further increase the already high-share of UK households in the premium pool, those with annual
incomes of USD50,000+, and the middle class with incomes of USD25,000-50,000. It could be that a successful public health
outcome will see a swing back towards spending on services and experiences, rather than physical goods.
PC volumes could also be squeezed as workers return to offices. Our core scenario is that levels of remote work peaked during
lockdown, but even with a partial return to the office the adoption of more widespread hybrid work models has put the UK PC
market on a higher volume trajectory. This will also impact the form factor mix by accelerating the trend away from desktops to
notebooks in the corporate and public sector markets.
Vendor strategies will also play a role in the coming years. Apple's shift away from Intel chips to Apple designed silicon for its Mac
range during 2020-2022 has the potential to be a disruptive force. Apple has already achieved performance improvements and
reduced power consumption for existing product lines, and over the medium-term new design choices could become available, as
well as pricing strategies. Apple's PC product strategy will be a powerful factor in a high-income market such as the UK, and in
combination with the strategic response of Windows and Chromebook vendors, will shape the PC market over the medium term.
The economic and IT market risk profile strengthened in 2021 because of the evidence that vaccines contribute to controlling the
number of severe cases, but there is still a downside scenario in which virus variants or fading immunity leads to another period of
public health restrictions and weaker growth. In the case of the UK, these downside scenarios could be higher impact than many
other developed markets because of the stresses that will be placed on firms and the economic system by the ongoing Brexit
process.
fitchsolutions.com
Meanwhile, on the supply-side there has been disruption to global supply chains in 2021, and within the technology sector a
specific shortage of chips. Our core scenario is the immediate shortages in 2021 will ease once the pattern of panic over-ordering is
halted by an end to operational restrictions on chip production, assembly and packaging operations in Asia-Pacific as the public
health situation improves. There will be however be some areas where products are in competition for scarce components such as
chips, graphics cards and storage in the case of PCs, games consoles and crypto miners - and it will be later in the forecast period
before the investments currently being made in foundry and assembly/packaging operations will come to fruition and tackle these
less acute and specific bottlenecks.
Purchasing Power And Demographic Trends

Household Income Breakdown (2021-2025)
f = Fitch Solutions forecast. Source: ONS, Fitch Solutions
The outlook for the cloud and data hosting industries in the UK, which are deeply integrated into the EU ecosystem, benefited from
the European Commission decision that data protection equivalence will allow data flows for a period of four years. There was
uncertainty introduced about the framework beyond this time horizon, when in August 2021 the UK government minister briefed
that the UK was planning for opportunities to diverge from EU data protection policies. Rhetoric could prove detrimental to
investment in data centre facilities where the client base is expected to have a regional focus.
Software and services investment trends in the UK will be shaped by the pandemic experience. Radical uncertainty and lockdown
mean that IT solutions that enable flexibility and resilience will be in high-demand, such as cloud infrastructure, platforms and
software. The public sector is also an important cloud market through the G-Cloud strategy marketplace. There will be some losers
from this shift, such as traditional outsourcing and facilities management where revenues will be cannibalised, while the unbundling
of applications enabled by cloud models will weaken the control of the largest integrated application vendors.
Firms also need to respond to the changes in consumer behaviour that were triggered by the pandemic, such as the jump in e-
commerce usage, as well as adjacent trends in did contactless/mobile payments, and other paperless processes. Elsewhere, the
combination of cloud platforms with 5G and data networks, edge computing, robotics and sensors will provide the infrastructure
and data flows for software and services solutions that utilise machine learning and other AI tools in new and innovative ways that
compliment and substitute for labour in physical and digital processes.
fitchsolutions.com
Verticals
The lasting impact of the Covid-19 pandemic is most severe for sectors such as hospitality and travel, as well as SMEs, and for this
reason the direct impact of economic scarring on the UK enterprise IT spending outlook is expected to be limited over the medium-
term. There is however a risk that the more general drag from indebtedness and disrupted global supply chains during the recovery
weigh on levels of private sector investment over the medium-term.
Instead it is the ongoing Brexit process that is the greater source of uncertainty for the IT market outlook. Foremost is the uncertain
treatment of UK financial services exports to EU markets because of a lack of permanent provisions in the UK-EU Trade and
Cooperation agreement. The financial services industry - comprising banking, insurance, asset management and stock exchange
industries - is the highest spending vertical for IT solutions in the UK, and the leading customer for high-value and complex
solutions. Developments around the UK-EU regulatory relationship could also shape the development of the Fintech sector, where
London's regional leadership faces a challenge from Berlin, Paris and Barcelona.
Even with a blow to the status of UK financial services within Europe the UK would continue to be one of the largest and most
lucrative enterprise IT markets globally. Decline in financial services would likely be gradual rather than an exodus, and there are
many other sectors with sophisticated IT demand, as well as a public sector with an ideological commitment to outsourcing by
successive governments and is the highest value in Europe. Other high-value verticals for IT vendors include professional and
research and development (R&D) services, the ICT industry itself, wholesale and retail trade, and manufacturing.
The acceleration in digital transformation as a result of the pandemic will drive IT investment by IT, R&D and communications firms
over the medium term. Another tailwind will come from the government's 2021 Industrial Strategy that has targeted ecosystem
development in artificial Intelligence (AI) and data, clean energy, and mobility. Support includes incentives for investment, along with
non-financial support such as development of data trusts, use of machine readable formats, and skills training.
ENTERPRISE TRENDS - GVA BY VERTICAL (UNITED KINGDOM 2019-2025)

Indicator 2019e 2020e 2021f 2022f 2023f 2024f 2025f
Agriculture nominal GVA, % total GVA 0.71 0.71 0.69 0.68 0.67 0.66 0.65
Mining nominal GVA, % total GVA 0.66 0.58 0.60 0.55 0.52 0.50 0.48
Manufacturing nominal GVA, % total GVA 9.65 9.49 9.15 8.92 8.77 8.63 8.52
Construction nominal GVA, % total GVA 6.17 5.75 5.92 5.98 6.04 6.10 6.19
Finance nominal GVA, % total GVA 7.41 7.71 7.70 7.72 7.78 7.84 7.89
Real estate nominal GVA, % total GVA 13.51 13.27 13.35 13.40 13.37 13.34 13.29
Other services nominal GVA, % total GVA 16.74 17.00 17.17 17.34 17.48 17.60 17.71
Utilities nominal GVA, % total GVA 2.62 2.55 2.54 2.53 2.51 2.49 2.47
Trade, accommodation & food service nominal GVA, % total GVA 13.07 12.42 12.45 12.54 12.54 12.51 12.47
Transport & communications nominal GVA, % total GVA 11.07 11.34 11.28 11.27 11.29 11.32 11.35
Public administration, education and human health nominal GVA, % total GVA 18.39 19.18 19.15 19.05 19.02 19.00 18.99
e/f = estimate/forecast. Source: Fitch Solutions
Manufacturing, logistics, and utilities are candidates for the installation of 'fourth industrial revolution' solutions. This will involve the
adoption of machine learning and data analytics tools that utilise new pipelines of data generated by sensors, 5G networks and
robotics will open new fields for software and services vendors to target. This will allow firms to automate more information and
physical processes via remote skill utilisation. Meanwhile, integration of renewables into energy supply through wind power projects
will require investments in demand and supply management systems.
An industry that saw a direct and immediate increase in IT demand as a result of the pandemic was retail and logistics as volumes in
fitchsolutions.com
the online channel boomed. This required rapid scaling on the part of retailers and transport companies in order to serve
consumers and process the increased volumes of products being delivered to households.
The public sector has several positives for the IT market. The government committed major new spending initiatives such as
hospital construction, road network modernisation, broadband and 5G rollout, transport infrastructure, education and defence
spending. The pandemic put huge pressure on parts of the public sector, and is likely to add impetus to investment in healthcare
operations. If a vaccine only offers partial or temporary immunity, IT investments could be used to aid health services in meeting
operational challenges like a greater requirement for faster diagnosis and remote management of chronic conditions to generate
flexibility in the hospital system.
IT INDUSTRY - HISTORICAL DATA AND FORECASTS (UNITED KINGDOM 2019-2025)

Indicator 2019 2020 2021f 2022f 2023f 2024f 2025f
IT market value, GBPmn 150,558.5 148,294.4 162,392.9 176,021.6 186,068.9 196,008.0 205,878.1
IT market value, % of GDP 6.8 7.0 7.1 7.2 7.4 7.5 7.6
Computer hardware sales, GBPmn 15,377.6 16,803.3 16,992.6 17,612.8 18,009.8 18,382.7 18,760.4
Personal computer sales, GBPmn 9,505.8 11,231.1 11,189.5 11,709.0 11,976.0 12,226.5 12,458.9
Software sales, GBPmn 32,174.9 34,150.5 38,753.9 43,753.2 47,349.7 51,327.1 55,489.7
Services sales, GBPmn 103,005.9 97,340.6 106,646.4 114,655.5 120,709.3 126,298.2 131,627.9
fitchsolutions.com
Industry Risk/Reward Index

Economic Recovery Slightly Improves Europe's IT Market Growth
Prospects
Key View
• The average score for the European IT Risk/Reward Index (RRI) has slightly increased by 0.3 points, up to 71.5 out of 100. Scores
are largely unchanged in most of the markets we survey, owing to the continuity of both our industry and country risk
expectations for H221.
• As Covid-related restrictions have eased, most economies have seen a rebound in GDP. We expect demand for IT products and
services will outpace the growth rhythm of the national economies in the medium term, especially driven by an increase in pent
up investment in cloud computing, software and servers.
• The risks to our outlook are weighted to the downside. The spread of the Delta variant in Europe is a major cause of concern for
new restrictions on economic activity, and lower vaccination rates in CEE could make Europe more vulnerable to future
widespread outbreaks and therefore economic downturns. At the same time, inflationary pressure concerns will also have an
impact on Europe's IT spending.
In our Q122 update of the Europe IT Risk/Rewards Index, the region's average score has improved by only 0.3 points. The majority
of the markets that we survey have seen their scores unchanged as either our core industry forecasts or risk views have seen little
changes.
Sweden is this quarter's outperformer, as the country benefits from exchange rate headwinds on top of already being one of the
most advanced markets in Europe. Italy and Bulgaria have both seen their overall scores downgraded, although we note this is
explained by updated trade data and changes in Bulgaria's country risk profile, rather than industry developments that negatively
affect the country's outlook.
We believe Europe's IT industry outlook is positive, with industry growth surpassing GDP growth in the medium term, and supported
by an uptake in cloud computing and software sales. Overall risks are weighted to the downside, as uncertainty surrounding the
Covid-19 Delta variant and future restrictions could hinder investment in the near term.
Germany continues to top our ranking, showing a solid GDP rebound and demonstrating leadership in key segments such as the
industrial IoT and electronics manufacturing. The country’s efforts in the deployment of 5G and fibre rollouts further support the
growth of adjacent IT services. On the other side of our ranking, Russia continues to lie at the bottom, largely explained by the
country’s higher geopolitical risk profile. The country’s continued tensions with the EU and the US, accompanied by an emphasis on
technological sovereignty harm the otherwise positive outlook for the country’s digitalisation efforts.
Among the markets that have seen an improvement of their RRI score, Sweden clearly outperforms and climbs six positions in our
ranking, up to third place. The country’s significant improvement can be explained by two factors. First, Sweden’s RRI had been
negatively affected by a strong Euro, which had a direct impact on the country’s IT imports. In this quarter’s update, our short-term
forecast now expects the Swedish krona to moderately strengthen against the Euro in light of a relatively less expansionary policy
from the country’s Riksbank in comparison to the ECB. Second, Sweden’s IT market continues to unlock pent-up demand as the
economy slowly gains confidence. While Sweden was already among the European leaders in terms of digital transformation, the
country has recently seen a significant increase in digital investments, and particularly in cloud migration demand.
fitchsolutions.com
Cloud Computing And Software Driving Growth In Europe

Selected Europe IT RRI Scores, Q122
Note: Scores out of 100; higher score = lower risk. Source: Fitch Solutions' IT Risk/Reward Index
Turkey has also seen marked improvements, with a 1.5-point increase in comparison to the Q421 Index. We caution that although
the country’s industry outlook has slightly improved from our previous update, Turkey’s relative score increase is better explained by
the emergence of new trade data as well as its ranking peers showing little changes. Turkey’s IT market had been remarkably
affected by the 2018-2019 Lira crisis, which weighed on the country’s import affordability, as well as new challenges arising from the
Covid-19 pandemic, with supply chain disruptions from Turkey’s East Asian trade partners and investment deferrals due to
economic uncertainty being major factors.
As the country recovers from the acute phase of the Covid-19 pandemic, we expect improving economic conditions accompanied
by the government’s support for ICT investment will sustain IT market growth, particularly in cloud computing and software sales,
which will in turn push forward growth in the country as traditional hardware sales lose momentum in the medium term. We see
Turkish IT market risks being skewed to the downside, especially those that stem from the country’s inflationary and political
instability prospects. This is reflected in Turkey’s low Country Risk score of 50.9, which falls far behind the region’s average of 68.
With regards to the region’s underperformers, we have seen Italy and Bulgaria recording decreases to their overall scores of 0.8 and
0.1 respectively. Italy has seen a downwards adjustment on the market outlook for the later years of the forecast period according
to new economic data, which also reflects the weak economic and political outlook in the country, even after the acute phase of the
Covid-19 pandemic eases. Bulgaria’s underperformance stems from a downgrade to the country's short-term political risk outlook,
owing to its continued legislative gridlock, which continues to slow down spending plans from the Next Generation EU – of which
digital transformation is a key element – and hinders progress in the country’s vaccination rates, the lowest in the EU at the time of
writing.
fitchsolutions.com
EUROPE IT RISK/REWARD INDEX, Q122

INDUSTRY COUNTRY INDUSTRY COUNTRY RRI Q-O-Q
COUNTRY RANK
REWARDS REWARDS RISKS RISKS SCORE CHNG
Germany 91.7 90.0 90.0 79.2 88.8 0.0 1
UK 88.3 90.0 90.0 74.8 86.5 0.0 2
Sweden 81.7 95.0 80.0 86.8 85.7 5.3 3
Netherlands 80.0 95.0 90.0 81.8 85.2 0.8 4
France 86.7 90.0 90.0 71.3 85.1 0.6 5
Denmark 73.3 95.0 90.0 84.6 82.7 0.0 6
Belgium 75.0 100.0 90.0 71.2 82.2 0.0 7
Finland 70.0 90.0 90.0 88.3 80.6 0.0 8
Ireland 78.3 80.0 90.0 80.8 80.6 0.0 9
Spain 78.3 85.0 90.0 64.4 78.9 0.0 10
Switzerland 73.3 85.0 90.0 73.1 78.2 0.0 11
Italy 80.0 80.0 90.0 62.7 78.1 -0.8 12
Austria 71.7 80.0 90.0 78.0 77.0 0.0 13
Portugal 65.0 70.0 90.0 74.4 70.9 0.0 14
Greece 61.7 75.0 90.0 53.5 66.9 0.0 15
Czech
70.0 75.0 55.0 43.2 64.6 0.0 16
Republic
Poland 66.7 60.0 50.0 70.9 63.8 0.0 17
Hungary 55.0 65.0 50.0 71.4 59.8 0.5 18
Turkey 66.7 55.0 52.5 50.9 59.3 1.5 19
Slovenia 45.0 70.0 60.0 77.8 58.8 0.0 20
Croatia 56.7 60.0 50.0 58.5 57.0 0.3 21
Bulgaria 58.3 55.0 45.0 58.1 55.9 -0.1 22
Russia 65.0 55.0 30.0 44.3 54.6 0.0 23
Romania 56.7 50.0 55.0 54.4 54.4 0.0 24
Serbia 58.3 45.0 45.0 46.5 51.3 0.0 25
Aver
erage
age 70.1 75.6 73.3 68.0 71.5 0.3 -
Note: Scores out of 100; higher score = lower risk. Scores are weighted as follows: 'Rewards' at 70%, of which Industry Rewards 65% and Country Rewards 35%; 'Risks' at 30%, of
which Industry Risks 40% and Country Risks 60%. The 'Rewards' score evaluates the size and growth potential of the IT market in any given state and broader economic/socio-
demographic characteristics that affect the industry's development. The 'Risks' score evaluates industry-specific dangers and those emanating from the state's political/
economic profile, based on Fitch Solutions' proprietary Country Risk Indices. Source: Fitch Solutions
fitchsolutions.com
Market Overview
Recent Developments
• The UK IT market contracted by 1.5% in 2020 to a value of GBP148.3bn. The contraction occurred because of the blow to
business confidence caused by the Covid-19 pandemic, and the restrictions that were put in place on economic activity through
public health efforts to contain the spread of infections. There was also uncertainty that weighed on business investment
because of Brexit negotiations, which were only concluded in late December 2020.
• The worst affected areas of the IT market in 2020 were traditional IT services where projects were downsized or delayed in an
environment of uncertainty, and so resources could be channeled to priority areas such as applications and infrastructure to
enable remote work. This accelerated the trend for cloud adoption and digital transformation in the private and public sector in
2020 when operations and processes had to be adapted to accommodate social distancing restrictions.
Hardware
The computer hardware market in the UK strengthened in 2020, despite the economic headwind caused by the Covid-19
pandemic and uncertainty surrounding Brexit negotiations, because of demand for PCs that was triggered by the surge in remote
working and distance learning during lockdowns. There were however areas of the computer market that were hit hard by the
pandemic, principally products for which demand is based on larger offices, such as desktops and printers. The computer hardware
market grew by 9.3% in 2020 in local currency terms, and was up by 9.8% in US dollar terms.
Hardware Market
(2019-2025)
PCs
• In 2020 there was a surge in demand for notebooks, and to a lesser extent tablets, when the implementation of lockdown
restrictions led to a large jump in the number of people working and studying remotely. The shift in working patterns created
fitchsolutions.com
demand for productivity oriented personal devices, with share household PCs inadequate, meaning firms and households that
could afford to do so, raced to acquire additional notebooks, tablets and Chromebooks.
• The flipside of this trend was the sharp fall in demand for desktops and workstations, which are product categories for which the
demand profile is weighted towards private and public sector offices, where demand declined due to the sharp fall in the
numbers of staff working in-house. This was a marked shift in the trend after enterprise PC investments had been made in 2018
and 2019 as part of preparations for the end of extended Microsoft support for Windows 7 in January 2020.
• The pandemic triggered the strongest PC volume growth in 2020 for almost a decade. The UK had been a low volume growth
trend because of the maturity of the PC market where ownership was widespread. PC penetration reached 92% of households in
2017, a high level for a developed market that was above the European Union 27 country average of 84%. Household
penetration varied by income level from 97% for the most affluent quartile of households, falling to 67% for the poorest.
PC Household Penetration
UK - PC Household Penetration By Device Type, % (2011-2018)
Source: Ofcom, Fitch Solutions
fitchsolutions.com
PC Volume Forecast
(2019-2025)
• Prior to 2020 the UK PC market had experienced a period during which the sales mix shifted towards higher value models. This
was because of the popularity of ultra-slim notebooks, especially Apple Macs and premium models from Windows partner
models, along with the growth of PC gaming culture. Meanwhile, it was at the low-end of the retail PC market where the impact
of smartphones was more powerful in cannibalising demand from more price sensitive households.
• In 2020 PC demand was broader because of the demands of remote work and study. Windows partner vendors were in a strong
position in 2020 because of the emphasis on productivity-oriented PCs, and their established relationships with private and
public sector clients that were looking to quickly setup staff remotely. The leading Windows partners in the UK (Lenovo, HP,
Dell, Microsoft, ASUS, and Acer) were the same firms that feature heavily across the region and globally. Demand from the
education sector strengthened uptake of Google Chromebooks in the UK in 2020.
• Apple's outsized share of sales continued to be a stand-out feature of the competitive landscape in 2020. Apple had strong
momentum going into 2020 after the Mac and Macbook Pro redesign in 2019 that triggered demand at the high-end of its PC
line-up, and then in 2020 it launched the first Macbook Air and Pro, and Mac Mini, products with its own designed system-on-a-
chip rather than chips from Intel. Meanwhile, the iPad continued to be totally dominant in the tablet category through a loyal
base of local consumers that were locked into the Apple ecosystem and generated a steady flow of replacement iPad purchases
that meant demand was not cannibalised in the same way as Android tablets were by smartphones. The proliferation of the iPad
range by screen size and price point meant that by 2020 Apple addressed almost the whole spectrum of tablet demand in an
affluent market like the UK.
fitchsolutions.com
PC Browsing Traffic
UK - PC Browsing Traffic By OS, % (2009-2020)
Source: Statcounter, Fitch Solutions
Printer, Copier And Multifunctional Peripherals
• The printer and copier category was the underperforming area of the UK computer hardware market in 2020 by a wide margin.
Unlike other areas of the market, for printers and copiers the challenges of the economic environment were exacerbated by
shifts in usage during lockdown. The reduced headcount in offices meant less demand for printers, and also accelerated the
existing trend that was in place for paperless modes of collaboration and communication.
• Another factor for several years prior to the pandemic was the longevity of printer and copier hardware, which meant users kept
equipment longer and saw vendors rely to a greater degree on ink sales and other support/after sales services. The leading
vendors in the printer and copier market were HP, Ricoh, Epson and Brother.
fitchsolutions.com
Printer And Copier Spending Forecast

(2019-2025)
Servers And Storage
• The UK IT infrastructure market for server and storage solutions, mainframes and other enterprise focused hardware is among
the highest value in the region in per capita terms, reflecting the high-value and technologically intensive composition of
economic activity that generates infrastructure demand from the financial services, R&D, ICT and public sector verticals.
• The server and storage market contracted by 7% in 2020 because of a slowdown in the rate of data centre investments. The
pandemic was a factor, with lockdown restrictions in H120 causing delays to construction, but a downturn was already expected
after a strong year of investment took place in 2019. The underlying growth trend 2016-2020 was driven by investments in data
centre capacity as vendors prepared for expected growth in European cloud services and consumer content usage by increasing
capacity.
• The market is competitive, with all major vendors, including the market leaders HPE and Dell EMC, and the challengers Cisco,
IBM and Lenovo, all targeting the public and private sectors in the UK. There was a growing share of sales attributable to ODMs
from East Asia that were contract manufacturers building servers for giant services firms like Google, Microsoft and Facebook.
Software And IT Services
The software and services segment contracted by 2.7% in the UK in 2020 because of the impact of the Covid-19 pandemic and
Brexit negotiations that were only concluded in late 2020, but there was a wide divergence in performance across different areas of
the market. The traditional IT services market and on-premises enterprise software were the worst affected areas of the market in
2020 when business confidence levels plummeted in H120 and non-essential projects were delayed or downsized. This was a
consequence of the scaling back of investment budgets in the face of uncertainty, as well as the diversion of resources inside
organisations to priority areas, which in the case of the IT market were the rollout of solutions to enable remote work and the
implementation of socially distanced operations and processes. This meant that cloud application adoption and digital
transformation projects accelerated in 2020, bolstering a trend that was already strong in the private and public sector.
fitchsolutions.com
Software & Services Market

(2019-2025)
Software
• In H120 the Covid-19 pandemic had a profound impact on the UK software market. The implementation of lockdown resulted in
a spike in demand for certain types of software, a trend that centred on solutions vital to enabling remote work, such as
collaboration, communication, virtualisation and cyber security software. This dynamic also meant that the trend towards cloud
software accelerated substantially, with private and public sector IT managers attracted by the responsiveness of the cloud
model to the urgency the situation. This scalability, flexibility, and the relative ease of maintenance and management of cloud
applications for a distributed workforce made them more attractive than on-premises hosted software during lockdown when
site access was at times prohibited.
• The surge in demand in some sub-categories of the software market was partially offset by the traditional core market for
enterprise software that was negatively affected by the downturn in business confidence due to the pandemic and Brexit, which
saw investment budgets scaled back. In terms of ownership of software suites, Eurostat data for 2019 shows UK enterprise
resource planning (ERP) penetration was below the EU-28 average for large firms and SMEs in 2019. Meanwhile customer
relationship management (CRM) adoption by large firms was slightly higher than the EU-28 average, but lower for SMEs. There
was still variability by vertical in 2019, with the highest rates found in IT- intensive verticals (ie, ICT and retail), and those with a bias
towards larger firm sizes.
• In addition to the presence of large global software vendors, such as Oracle, SAP, Microsoft, HPE, Salesforce.com and IBM that
dominate the large, high-value end of the market, there are about 300 software providers that compete in the local market, most
notably the UK payroll and accounting software vendor Sage that is among the largest software vendors in Europe - but also
banking software vendor Misys, trading systems software vendor Fidessa, HR specialist NIS, data security firm Sophos, and
Aveva, a software vendor providing solutions for engineering.
fitchsolutions.com
ENTERPRISE SOFTWARE ADOPTION BY FIRM SIZE AND VERTICAL, % (2019)

ERP CRM
UK EU28 UK EU28
SMEs (10-249 employees)* 23 33 29 32
Large enterprises (250+

65 78 63 62
employees)*
By Vertical*:
Manufacturing 35 46 28 32
Utilities na 41 21 36
Construction 17 21 13 20
Wholesale and retail trade 18 29 29 32
Transportation and storage 20 26 20 22
Accommodation 14 25 na 43
ICT 41 49 66 61
Real estate activities na 36 na 38
Professional, scientific and

27 34 43 41
technical
Administrative and support

19 28 38 36
services
Note: *Non-financial enterprises with 10 or more employees. na = not available. Source: Eurostat, Fitch Solutions
Consulting, Maintenance And Systems Integration
• In the UK traditional areas of the IT services market such as software and hardware customisation, programming services,
consulting, integration, training and maintenance are the largest part of the IT market, and also the most localised with the
majority of demand met by firms with local presence that is critical for project type spending.
• In 2020 there was a contraction in the traditional IT services market due to the pandemic-induced recession and associated
decline in business investment, as well as uncertainty about the outcome of Brexit negotiations that were only concluded in late
December 2020. In this climate the private and public sector delayed and/or downsized non-essential IT projects, while some
areas of the market also faced disruption to projects because of restrictions on non-essential site access during lockdown, and
the reduced bandwidth within IT departments for projects at a time when operational resilience in the face of social distancing
restrictions and business continuity were the priority. The worst hit area of the market was project related spending on shorter
contract terms, such as consulting, but consulting firms with a cloud focus performed well in 2020 because of the acceleration
to cloud migrations across the economy.
• The level of demand from the UK public-sector is one of the most important factors in making the market one of Europe's
largest. Key government sub-verticals include healthcare and the NHS National Programme, as well as education, local
government and defence. The government's Digital by Default initiative to modernise and transform government services
created new opportunities, and the annual value of government IT tender awards exceeds GBP10bn. Beyond the outsized role of
the public sector, other high spending verticals over the review period included the financial services sector through bank
spending as part of regulatory compliance.
• There was, however, a squeeze in Europe's most lucrative IT services market because of investigations into the value for money
to taxpayers of outsourcing and criticisms from small IT service providers to the Office of Fair Trading that they are shut out of
public sector contracts due to the close relationships between public authorities and large IT firms such as HP, Capita and
Capgemini.
fitchsolutions.com
• An increasingly important part of the services market in the UK and other developed economies in 2018 and 2019 was the
increased utilisation of big data analytics, which taps into the large volumes of data produced by mobile technologies, sensors
and real-time enterprise software. Utilisation of Big Data services by UK enterprises was above the EU-28 average in 2016, with
social media analysis a key trend, especially in the hospitality, real estate and retail verticals where penetration was significantly
above the regional average. One trend not reflected in the Eurostat data is the role of big data in financial services, for instance,
the use by Barclays of machine data indexing technology from US vendor Splunk in order to meet regulatory demands.
Big Data Utilisation

Enterprise Big Data Utilisation, % (2016)
Source: Eurostat, Fitch Solutions
• In contrast to growth of spending on emerging technologies, over the review period there was pressure on demand for facilities
management, maintenance and computer hardware repair. These were already the smallest segments of services demand and
recorded only modest spending growth because of increased longevity of hardware, and the switch by enterprises from in-
house deployments towards centralised cloud services where the major cloud providers take on maintenance and repair duties.
• The large size of the public and private sector IT services market has attracted a wide range of vendors to the market, including
global leaders and some local firms. The market leaders include Capita, Capgemini, Atos, CGI, Fujitsu, CSC, IBM, BT Global
Services, PWC, Accenture, BAE Systems and Lockheed Martin. The Indian outsourcing providers have also been
successful in targeting demand from UK firms, especially in the financial services vertical for application development, with Tata
Consultancy Services, Tech Mahindra, Infosys, HCL and Wipro all having established client bases.
Data Hosting And Processing
• The data hosting and processing market includes firms that provide the infrastructure for hosting and data processing services in
the UK. Data hosting can include specialised hosting such as for websites, streaming services or applications, data storage, and
time-share for mainframe facilities. Processing includes optical scanning services, text processing and computer input
preparation. The industry saw an increase in usage in 2020 when remote working, cloud migrations and online content
consumption all grew during lockdown.
• The UK is one of the main hosting hubs in Europe and there was strong revenue growth during 2018 and 2019 as data hosting
and processing services demand was generated by the migration from legacy to cloud systems, as well as in the maintenance of
cloud-based services, and also as spending from consumer-facing services for online video, gaming and other content.
• There is broad competition across the hosting market, mostly between specialist local firms, but also some international firms
fitchsolutions.com
and telecoms operators. Leading players include 1and1, iomart, Rackspace, FastHosts, WestHost, WebFaction, Zen, Colt,
DXC Technology and IBM. There was some controversy surrounding the acquisition by a Chinese consortium of a 1% stake in
London-based data centre and hosting provider Global Switch in December 2016, which the Australian government
responded to by moving Department of Defence data out of Global Switches Sydney facilities. Global Switch has two data centre
facilities in London serving financial institutions, the public sector and other enterprises, most notably BT.
Cloud Services
• In 2020 there was an acceleration in the adoption trend for cloud application and infrastructure services in the UK during the
Covid-19 pandemic. The crisis put pressure on private and public sector management through new operational challenges,
which they responded to by increasing spending on IT solutions that enabled operational continuity through workforce and
supply chain flexibility. The advantages of SaaS and IaaS over on-premises models in terms of scalability, flexibility, and ease of
management and maintenance were therefore the critical factor in the accelerated adoption trend in 2020.
• The UK is one of the more-developed cloud markets in Western Europe for software-, infrastructure- and platform-as-a-service
sales (SaaS/IaaS/PaaS), built on the complex base of enterprise demand that meant adoption rates for basic and advanced
cloud services was higher in the UK than the EU average, with the widest gap existing for public cloud services, and specifically
file storage.
• There is also a high-value, public-sector cloud market that has been developed through cloud-first policy adopted in 2014 and
framework agreements and online store that make up the 'G-Cloud' strategy. Government data showed that G-Cloud sales
totaled GBP1.32bn January to October 2019, a figure that exceeded the total of GBP1.19bn for all of 2018.
• In terms of cumulative G-Cloud spending 2012-2019, which reached GBP5.39bn in October 2019, the main investments came
from the Home Office (GBP771mn), HMRC (GBP346mn), Department for Work and Pensions (GBP336mn) and Ministry of Justice
(GBP333mn).
• The data also showed the amount of G-Cloud services that went to SMEs, which accounted for 43% of cumulative sales value to
October 2019. Meanwhile, some of the biggest suppliers through G-Cloud were Equal Experts, Deloitte, UKCloud, Capgemini,
BJSS, PA Consulting and IBM. Outside of the public sector cloud market, the competitive landscape sees a large role for US
firms and global leaders, such as Amazon Web Services, Google, IBM and Microsoft, and the latter has a partnership with
Japanese IT vendor Fujitsu to offer services to deliver and manage solutions based on Microsoft's Azure platform.
Cloud Adoption
Enterprise Cloud Adoption By Service Type, % (2018)
Note: Non-financial enterprises with 10 or more employees. Source: Eurostat, Fitch Solutions
fitchsolutions.com
• Eurostat data provides an outline of the market and shows the UK cloud market to be one of the more advanced in the region by
2018. The data shows that adoption of at least one cloud service was considerably higher for both large firms and SMEs in the
UK compared to the EU. The data also shows sustained growth in adoption for all firm sizes over 2014 to 2018, while for verticals
in the UK there was also robust adoption across the economy, with the exception of utilities which were early adopters, but
then plateaued in terms of the number of firms adopting at least one service.
• Adoption data show that public cloud service were the largest part of the market in 2018, with adoption rates more than double
the rate of private clouds, but there was a change underway in 2017-2018 as hybrid and private cloud adoptions gained
momentum among larger enterprises.
• Meanwhile, at the usage level, data for the UK fit a familiar pattern in 2018, with the highest adoption levels for basic cloud
services, such as email and office software, as well as file storage. There was, however, strong growth 2016-2018 in the use of
the cloud for hosting databases, finance applications and as computing power for firms own software applications.
CLOUD COMPUTING ADOPTION BY FIRM SIZE AND VERTICAL, % (2018)

UK EU-28
Large enterprises (250+ persons employed)* 72 56
SMEs (10-249 persons employed)* 41 25
By Vertical*:
Manufacturing 39 22
Utilities 26 27
Construction 44 21
Wholesale and retail trade 40 25
Transportation and storage 37 21
Accommodation 30 25
ICT 80 64
Real Estate na 33
Professional, scientific and technical activities 65 44
Administrative and support service activities 41 29
Note: *Non-financial enterprises. Firms with 10 or more employees. Source: Eurostat, Fitch Solutions
fitchsolutions.com
Industry Trends And Developments

Key View: The UK IT industry faced several downside risks in 2020, principally the UK's exit from the EU at the start of 2020, and
then the Covid-19 pandemic dominated the outlook for the remainder of the year. The most pronounced impact of the pandemic
on trade flows was the jump in notebook and tablet imports in 2020, while the local industry proved relatively resilient because of
the ability of most sector activity to adjust rapidly to remote and hybrid modes of work. The exit from the EU created regulatory risks
for IT vendors, and in some areas increased costs to business, but investment continued to flow into important areas of the software
and IT services industry, such as cloud computing and data centres in 2019 and 2020.
IT Trade
Hardware
• The trade deficit in the UK for IT hardware widened in 2020 to the highest level since 2015, and the deficit for computer
hardware finished devices increased to the highest level since 2011. This trend was concentrated on one product category, with
the notebook and tablet trade deficit increasing by 24% in 2020 to almost USD8bn because of demand generated by lockdown
policies and the rapid switch to remote work and distance learning.
• Trade flows were uneven across the course of 2020 because of the impact of the pandemic on supply chains. There was a drop
in trade flow value in Q1 when supply chains in China were disrupted, and the height of economic and political uncertainty in
Europe meant that shops were closed and purchases deferred. The data then show a recovery in trade flows through the
remainder of the year, especially in H220.
• The pandemic did not alter the core characteristics of IT hardware trade flows in teh UK. There was still reliance on imported
finished products for the mass market that meant and the depth of the consumer and enterprise markets meant a relatively high
share for IT hardware in total national goods imports. Meanwhile, a lack of large-scale IT hardware production activities meant a
relatively low share for IT hardware as a share of exports.
• In 2020 notebooks were still the highest value trade flow at imports of USD9.1bn and exports of USD 1.1bn - ahead of servers
and storage solutions, computer parts and integrated circuits. China was the largest source of computer hardware imports at
around half of the total, though for integrated circuits it was the Netherlands that was the most important source ahead of the
US and Germany.
IT HARDWARE TRADE (UK 2015-2020)

2015 2016 2017 2018 2019 2020
Trade Balance (USDmn)
Computer
-10,547 -9,418 -9,238 -11,038 -10,466 -12,112
Hardware
Computer Parts -1,088 -983 -693 -911 -1,116 -983
Electronic
-2,873 -1,822 -1,204 -1,151 -959 -783
Components
IT Hardware Total -14,508 -12,223 -11,136 -13,100 -12,542 -13,878
Exports (USDmn)
Computer
4,673 4,466 4,252 4,677 5,183 4,652
Hardware
Computer Parts 1,561 1,490 1,359 1,419 999 920
Electronic 2,970 3,028 3,181 3,094 2,832 2,610

fitchsolutions.com
2015 2016 2017 2018 2019 2020
Components
IT Hardware Total 9,205 8,984 8,792 9,189 9,015 8,182
IT Total As % Of
2.0 2.2 2.0 1.9 1.9 2.0
National Exports
Imports (USDmn)
Computer
15,220 13,884 13,490 15,715 15,649 16,763
Hardware
Computer Parts 2,649 2,473 2,052 2,329 2,115 1,903
Electronic
5,843 4,850 4,385 4,245 3,792 3,393
Components
IT Hardware Total 23,712 21,207 19,928 22,289 21,556 22,059
IT Total As % Of
3.8 3.3 3.1 3.3 3.1 3.5
National imports
Source: Intracen, Fitch Solutions
ICT Services
• There was volatility in ICT services export value from the UK during the review period, while import value proved more stable, for
both data points the growth over 2014-2019 was slower than many markets in Western Europe. The volatility in exports
occurred in 2019 when they dropped in US dollar terms, mainly because of a near 16% decline in computer service exports to
the US, which was by some distance the largest single export market for UK computer services. Exports to Australia also
recorded a sharp decline year-on-year in 2019, but exports to the EU increased.
• This volatility did not fundamentally alter the structure for UK ICT services trade flows - including computer, information and
telecommunication services - which continued to contrast with the IT hardware segment. Office of National Statistics data
show total imports of almost GBP8.3bn in 2019 and exports of GBP16.1bn.
• The UK ran an ICT services trade surplus throughout 2013 to 2018. The surplus for ICT services trade stood in contrast to the
persistent deficit for IT hardware, but services trade flows were smaller than hardware throughout the review period, and much
lower value relative to domestic output because of the non-tradeable nature of large parts of the services market.
fitchsolutions.com
ICT Services
UK - ICT Imports & Exports, GBPmn (2014-2019)
Source: ONS, Fitch Solutions
IT Industry Analysis
The UK still scores highly in our Operational Risk Index in 2021 because of its long standing pro-business and generally predictable
policy environment, investment openness, and stable economic performance. The Brexit process has however raised significant
questions for the industry, and uncertainty persists even after the UK left the EU in January 2020 and the Trade and Cooperation
Agreement came into effect. Under the deal the transfer of personal data between the UK and EU was no longer allowed by default.
Meanwhile, the digital trade chapter included a ban on data localisation, meaning firms and the public sector cannot require specific
jurisdictional data storage, or demand access to source code. The digital trade chapter also included a positive obligation for
cooperation on the development of emerging technologies such as aritificial intelligence and quantum computing.
Successive UK governments were ideologically averse to industrial policy, but this situation has evolved in the past decade as a
more proactive stance was taken, and this is creating opportunities for IT ecosystem development in the UK. The 2021 update to
the Industrial Strategy set out four Grand Challenges around which the government, businesses and research institutions will
collaborate: artificial Intelligence (AI) and data, ageing society, clean growth, and the future of mobility. There is also a Sector Deal for
AI that draws on the Grand Challenge as an incentive for investment, along with non-financial support for industry development
such as development of data trusts, use of machine readable formats, and skills training.
fitchsolutions.com
Operational Risk Index

2021
Note: Scores out of 100; higher score = lower risk. Source: Fitch Solutions
The turnover of the UK's IT industry - including hardware, software and services - increased to over EUR154bn in 2018, a figure that
was almost 50% higher than 2013. More than 95% of this turnover was accounted for by the software and services industry, and
this was also the industry sub-category that delivered all growth in 2013-2018, while hardware turnover contracted. This is because
the computer hardware and components industry lacked labour cost competitiveness and the support from industrial policy that
was required to compete with the major Asian production centres, or those in Central and Eastern Europe (CEE).
IT industry development in the UK has therefore taken a more organic development path than most advanced economies, and is
specialised on high-value research and intellectual property activities, alongside a large non-tradeable services industry to serve
the high-value UK enterprise and public-sector market. The emphasis on research activities meant that the industry was in a
relatively strong position to adapt to the Covid-19 pandemic, with many roles suitable to be undertaken remotely with the aid of
collaboration and communication applications.
Computer Hardware
• Production of computers and peripherals increased to EUR2.3bn in 2018, the highest level since 2013. This performance was
generated by demand for servers and storage solutions generated by the cloud data centre investment boom in the UK and
Europe.
• Performance in 2018 represented a break with the trend of decline that was in place 2012-2017 that had been driven by weak
demand for PCs and printers in a mature market, currency impacts, and the main long-term factor of production concentration
in the large scale and low cost production and assembly centres in CEE or Asia-Pacific.
• By 2018 the UK industry was specialised in higher value product manufacturing such as custom desktop, workstation and
gaming PCs, as well as enterprise infrastructure. Local PC assemblers and customer builders include PC Specialist, Novatech,
Chillblast and MESH Computers. Meanwhile Broadberry Data Systems is the leading UK vendor of high-end custom
enterprise storage, server and workstations - with customers that include Tesco, the BBC and all of the top-20 UK universities.
Components And Parts
• The components and parts industry is the largest segment of the UK electronics industry. Eurostat data show a turnover of
almost EUR4.3bn in 2018, the seventh highest figure within Europe. The role of the UK component industry at the global and
fitchsolutions.com
regional level is however understated by production and export data because of a specialisation in research and knowledge-
intensive activities.
• The UK Electronics Skill Foundation reported in 2017 that 14 of the top 20 semiconductor companies globally had design or
manufacturing facilities in the UK, including NVIDIA and Intel. According to microelectronics industry group NMI 40% of
Europe's design houses are in the country. It is UK-founded (and SoftBank owned since 2016) ARM that is the most
important semiconductor design vendor, as a global leader in power efficient chip design, a crucial enabler of and beneficiary
from the smartphone boom.
• Other UK-based chip companies are also specialised and design focused, such as mobile graphics processor IP licensing
vendor Imagination Technologies (acquired by Canyon Bridge in 2017) and Frontier Smart Technologies that has been
identified as a potential beneficiary of the smart assistant platform through its digital radio and smart audio devices chips that are
used in Google's Chromecast.
IT HARDWARE INDUSTRY PERFORMANCE (UK 2013-2018)

2013 2014 2015 2016 2017 2018
Manufacture Of Computers And Peripherals
Enterprises 731 706 870 868 848 826
Turnover (EURmn) 2,397 2,125 1,987 2,058 1,822 2,347
Value added at
factor cost 1,056 1,002 925 905 552 na
(EURmn)
Manufacture Of Electronic Components And Boards
Enterprises 928 933 919 911 895 889
Turnover (EURmn) 3,952 3,525 3,315 3,513 3,410 4,322
Value added at
factor cost 1,556 1,348 1,305 1,552 1,576 na
(EURmn)
na = not available. Source: Eurostat, Fitch Solutions
Software And Services
• The software and services industry - defined as software publishing, computer programming, consultancy,
facilities management, data hosting and processing and computer repair - recorded turnover growth in 2018 to
almost EUR144bn. The large industry is mainly focused on serving domestic demand in both the private and public sector, with
only 5-6% of domestic production exported.
• The largest contributors to software and services industry turnover, value added and employment are computer consultancy,
programming and other traditional IT services that together employed more than 665,000 people in 2018. A large number of
these people were employed as contractors, evident in the more than 158,000 firms in 2017, equating to average number of
employees at 4.3 in 2017, down from 4.9 in 2008. This composition also explains some of the volatility in headcount in 2018 as
firms prepared for new regulations to be introduced that set the definitions of contractors in the UK.
• The main support for the software and services industry in the UK is the lucrative domestic market - for instance public-sector
outsourcing is especially high value in the UK. Consultancy is the largest sub-segment where a host of regional and global
leaders, such as AT Kearney, Accenture, Atos, Deloitte and KPMG make the UK one of the most prominent centres for IT
consultancy industries globally. Another factor boosting the programming segment (and software publishing) has been the UK's
position at the forefront of the European app industry.
• London is one of the most important locations for the data hosting industry in Europe, along with Dublin, Amsterdam and
Frankfurt. This position has been built on the high-value of local demand from the large financial and professional services
fitchsolutions.com
industries, especially financial services where low-latency and geographic proximity are crucial factor. Capacity expansion
investments continued during 2018-2020 despite the uncertainty surrounding the Brexit process. Investment has come from
hyperscale cloud vendors - with Microsoft, Amazon, Google, IBM and Oracle all hosting regions in the UK - and colocation
providers offering services to a range of industries.
SOFTWARE AND SERVICES INDUSTRY PERFORMANCE (UK 2013-2018)

2013 2014 2015 2016 2017 2018
Software Publishing
Number of enterprises 1,942 2,141 2,230 2,401 2,516 na
Turnover, EURmn 2,519 2,909 3,248 3,015 3,296 3,841
Value added at factor cost, EURmn 1,438 1,608 1,768 1,739 2,009 na
Number of people employed na 11,947 na na na na
Computer Programming, Consultancy And Related
Turnover, EURmn 88,653 98,768 118,441 112,344 112,772 127,209
Number of people employed 553,383 610,438 621,288 683,339 710,889 665,642
Of Which Computer Programming
Turnover, EURmn 21,289 25,671 31,990 31,242 32,903 na
Number of people employed 135,372 149,318 154,673 173,048 188,218 na
Of Which Consultancy
Data Processing And Hosting Activities
Number of people employed na na na 31,138 41,309 na
Repair Of Computers And Peripheral Equipment
na = not available. Source: Eurostat, Fitch Solutions
fitchsolutions.com
Competitive Landscape
United Kingdom IT Vendors
Arm
Arm is the leading global designer of semiconductor technology used in smartphones, as well as being deployed in other
consumer electronics devices and Internet of Things systems, for instance smart sensors, advanced driver assistance systems and
data centers. Semiconductor firms and electronics companies pay an upfront fee to access Arm technologies, with major licensees,
including Apple (A6, A6X and A7 chipsets), Qualcomm (Snapdragon chips), AMD, Broadcom, Samsung, STMicroelectronics,
Huawei, IBM, Microsoft, NVidia, LG, Texas Instruments and Infineon Technologies. By September 2020, 180bn chips had
been shipped by its licencees.
Arm was founded in the UK and still has a large workforce in the country at sites in Cambridge, Bangor, Belfast, Glasgow, Manchester,
Sheffield and Warwick. Its expansion strategy is global, with the total number of engineers across sites in Cambridge, San Jose, Austin
and Shanghai expected to double in 2017-2022 under the ownership of Japan-based Softbank, after it acquired the firm for
GBP24bn in 2016. In September 2020 GPU vendor Nvidia announced that it had agreed to buy Arm from Softbank for USD40bn,
although the deal requires regulatory approval which may not be forthcoming until 2022, if at all, with Chinese authorities reported
to be a possible barrier. Nvidia plans to keep Arms open licensing model, and reports state that Nvidia is considering licensing some
of its GPU technology through Arm as well as integrating Arm IP with its portfolio to allow it to be more competitive in the system-
on-a-chip market as well as next-generation markets such as autonomous vehicles, robotics and drones.
Sage
The Sage Group is a software company focused on accounting, payroll and human capital managements, and payments solutions.
It has a strong presence in the small- and medium-sized enterprise (SME) market and is UK-headquartered, with more than half its
revenue coming from Europe in FY2020. During the pandemic Sage created local advice hubs and worked with the government to
help its SME clients access available financial support through its software. It has global operations that span the US, South Africa,
Brazil, Australia and the Middle East.
The key strategic focus is Sage Business Cloud, a portfolio of cloud native and cloud connected solutions aimed at the SME market.
In 2018, Sage reorganised its product portfolio under Sage Business Cloud, including its Accounting, Payroll, Financial, Sage Intact,
Enterprise Management, People and Payments solutions. It reported Sage Business Cloud penetration of 61% in FY20.
fitchsolutions.com
Sage
Sage - Revenue Mix, GBPmn (2019-2021)
Source: Sage, Fitch Solutions
Micron
Micron is a US computer memory and storage solutions vendor with global operations and annual revenues of more than
USD20bn. Micron has both sales offices (Bracknell and East Kilbride) and manufacturing operations (East Kilbride) in the UK. The
East Kilbride facility was created as Micron's European memory module production and sales hub, housing assembly, test, quality
control, delivery and service functions for the region. In June 2020 Micron reported that its global operations had seen a boost from
demand for data centre hardware and notebooks, in which its its DRAM chips are a key component.
Newport Wafer Fab (Nexperia)
Newport Wafer Fab is a semiconductor manufacturer located in Newport, Wales, that was created in 2017 when Infineon
Technologies sold its factory to private company Neptune 6, with Infineon continuing as a customer. In July 2021 the sale of
Newport Wafer Fab to Nexperia was agreed. Nexperia is a Chinese-owned company headquartered in the Netherlands and also has
a site in Manchester that was previously an NXP Semiconductors fab.
The production of semiconductors at the Newport Wafer Fab site dates back to the 1980s and forms part of the CSconnected
government-backed semiconductor cluster. In H121 the facility had a capacity of 32,000 wafers a month, producing
semiconductors, microcontrollers, LED drivers, sensors, and automotive and power management integrated circuits. In January
2021 Newport Wafer Fab announced plans to raise financing for a USD50mn investment to increase production capacity against
the backdrop of strong demand for power management integrated circuits.
NXP Semiconductors
NXP Semiconductors is a Netherlands-headquartered semiconductor manufacturer, with global operations that span 35 countries
and more than 45,000 employees. NXP operates three sites in the UK, with a focus on research and development (R&D) activities
after the spin out of front-end factories into Nexperia in 2017 that took ownership of its fab in Manchester. There are important links
in the UK between the local automotive industry and NXP's R&D operations. For instance, the site in Southampton designs
integrated circuits for keyless entry, start-stop and immobiliser systems.
fitchsolutions.com
Dialog Semiconductor
Dialog Semiconductor is a fabless semiconductor vendor that outsources production to foundry companies including TSMC and
UMC. It specialises in application specific mixed-signal integrated circuits, such as for power management, audio, display, VoIP,
short-range wireless and custom system-on-a-chip, that are used in smartphones, computers, Internet of Things devices and smart
home products. The UK is the most important site for its global R&D operations, while its manufacturing and testing facilities are in
Germany. In February 2021 Japanese semiconductor manufacturer Renesas agreed to acquire Dialog for USD5.9bn.
The Covid-19 pandemic had a mixed impact on Dialog in 2020. There was some disruption due to shutdowns of its customers'
production plants during the acute phase of the pandemic in China early in 2020. Dialog reported that there was growth in demand
for its older technologies such as chips for notebooks, tablets and headphones derived from families working and schooling from
home, which helped to compensate for declines in demand for its core smartphone components business.
Seagate Technology
US-based hard disk drive vendor Seagate Technology has had a manufacturing facility in Northern Ireland since 1993, and by
2019 the company had invested more than GBP1bn and employed 1,400 people at the site. The most recent investment of
GBP57mn was announced in April 2019 and was supported by a GBP9.95mn investment from Invest Northern Ireland. Seagate's
facility at Springtown is a 200mm wafer fabrication plant that has a legacy specialisation in recording heads for hard disk drives, at
one point producing 25% of the global supply.
Retailers
Electronics
Third-party mobile phone retailers came under pressure as a result of the expansion of retail networks by mobile operators;
consumer electronics firms such as Apple and Samsung; various mass grocery retailers; and growing online sales. Mobile phone
retailer Phones4U went into administration in September 2014. In the same year, electronics retailer Dixons merged with
Carphone Warehouse to create Dixons Carphone. In January 2020 video game retailers GAME confirmed it had plans to sell
almost 40 outlets following disappointing Christmas sales. In 2019 GAME agreed to a GBP52mn takeover by Frasers Group (formerly
Sports Direct). In 2020 the Covid-19 pandemic accelerated the shift away from physical retail towards the online channel.
fitchsolutions.com
SELECTED ELECTRONICS RETAILERS

Company Parent/ Sub-Sector Revenue Employees Stores Notes
Ownership
Currys PC World, Dixons Carphone Electronics and GBP6.6bn na 991 Formed in 2014
Carphone service by the merger of
Warehouse Dixons Retail and
Carphone
Warehouse
Group.
GAME Digital Frasers Group Games consoles, GBP783mn 2,953 259 Initial public
video games offering held in
2014.
Argos Sainsbury's Mobile phones, GBP4.1bn 28,791 1,192 (including na

electronics, 281 within
general Sainsbury's
merchandise stores)
na = not available/applicable. Source: Companies, trade press, Fitch Solutions
E-Commerce And Online Marketplaces
E-commerce is an increasingly important part of the UK's retail landscape, a trend that accelerated during the pandemic, reflected
in Amazon's decision to hire an additional 5,000 workers to meet increased demand in 2020. Amazon is the clear market leader,
but leading Chinese online retailer Alibaba is expanding its UK interests, showing the attractiveness of the market. Established
retailers, including mass grocery retailers, are also expanding their online presence. The war to win online retail market share is
increasingly being fought in the area of delivery.
fitchsolutions.com
United Kingdom Demographic Outlook

Demographic analysis is a key pillar of our macroeconomic and industry forecasting model. Not only is the total population of a
country a key variable in consumer demand, but an understanding of the demographic profile is essential to understanding issues
ranging from future population trends to productivity growth and government spending requirements.
The accompanying charts detail the population pyramid for 2019, the change in the structure of the population between 2019 and
2050 and the total population between 1990 and 2050. The tables show indicators from all of these charts, in addition to key
metrics such as population ratios, the urban/rural split and life expectancy.
Population
United Kingdom - Population, mn (1990-2050)
e/f = Fitch Solutions estimate/forecast. Source: World Bank, UN, Fitch Solutions
Population Pyramid
United Kingdom – 2019 Male vs Female Population, '000 (LHS) & 2019 vs 2050 Population, '000 (RHS)
Source: World Bank, UN, Fitch Solutions
fitchsolutions.com
POPULATION HEADLINE INDICATORS (UNITED KINGDOM 1990-2025)

Indicator 1990 2000 2005 2010 2015 2020e 2025f
Population, % y-o-y 0.35 0.69 1.00 0.67 0.53 0.36
Population, total, male, '000 27,772.1 28,711.6 29,517.5 31,175.3 32,461.5 33,542.4 34,302.1
Population, total, female, '000 29,362.3 30,211.7 30,770.5 32,284.5 33,398.6 34,343.6 34,971.5
Population, total, '000 57,134.4 58,923.3 60,288.0 63,459.8 65,860.1 67,886.0 69,273.6
Population ratio, male/female 0.95 0.95 0.96 0.97 0.97 0.98 0.98
KEY POPULATION RATIOS (UNITED KINGDOM 1990-2025)
Indicator 1990 2000 2005 2010 2015 2020e 2025f
Dependent ratio, % of total working age 53.2 53.7 51.5 51.7 55.1 57.1 59.0
Dependent population, total, '000 19,834.1 20,579.3 20,505.9 21,617.7 23,400.1 24,663.4 25,699.1
Active population, % of total population 65.3 65.1 66.0 65.9 64.5 63.7 62.9
Active population, total, '000 37,300.3 38,344.0 39,782.0 41,842.1 42,460.0 43,222.6 43,574.6
Youth population, % of total working age 29.1 29.2 27.2 26.5 27.2 27.8 27.5
Youth population, total, '000 10,836.1 11,214.5 10,838.4 11,102.6 11,562.3 12,000.4 11,972.6
Pensionable population, % of total working age 24.1 24.4 24.3 25.1 27.9 29.3 31.5
Pensionable population, '000 8,998.0 9,364.8 9,667.5 10,515.1 11,837.8 12,663.0 13,726.4
URBAN/RURAL POPULATION AND LIFE EXPECTANCY (UNITED KINGDOM 1990-2025)
Indicator 1990 2000 2005 2010 2015 2020e 2025f
Urban population, % of total 78.1 78.7 79.9 81.3 82.6 83.9 85.1
Rural population, % of total 21.9 21.3 20.1 18.7 17.4 16.1 14.9
Urban population, '000 44,644.8 46,343.8 48,179.1 51,594.1 54,417.6 56,958.4 58,968.5
Rural population, '000 12,489.6 12,579.5 12,108.8 11,865.7 11,442.5 10,927.6 10,305.1
Life expectancy at birth, male, years 72.8 75.3 76.8 78.3 79.2 79.8 80.7
Life expectancy at birth, female, years 78.4 80.1 81.2 82.3 82.9 83.1 83.5
Life expectancy at birth, average, years 75.7 77.8 79.1 80.4 81.1 81.4 82.1
POPULATION BY AGE GROUP (UNITED KINGDOM 1990-2025)
Indicator 1990 2000 2005 2010 2015 2020e 2025f
Population, 0-4 yrs, total, '000 3,823.9 3,550.7 3,458.1 3,898.1 4,086.9 3,924.5 3,896.6
fitchsolutions.com
Indicator 1990 2000 2005 2010 2015 2020e 2025f
Population, 85-89 yrs, total, '000 595.3 754.9 755.5 930.8 1,026.2 1,077.6 1,170.0
Population, 90-94 yrs, total, '000 189.5 286.0 323.1 345.4 444.7 490.6 532.9
Population, 95-99 yrs, total, '000 37.3 60.5 74.5 90.1 101.3 130.1 146.3
Population, 100+ yrs, total, '000 4.1 6.6 8.5 11.2 14.1 15.8 20.0
POPULATION BY AGE GROUP % (UNITED KINGDOM 1990-2025)
Indicator 1990 2000 2005 2010 2015 2020e 2025f
Population, 0-4 yrs, % total 6.69 6.03 5.74 6.14 6.21 5.78 5.62
Population, 100+ yrs, % total 0.01 0.01 0.01 0.02 0.02 0.02 0.03
fitchsolutions.com
Information Technology Methodology

Industry Forecast Methodology
Fitch Solutions’ industry forecasts are generated using the best-practice techniques of time-series modelling and causal/
econometric modelling. The precise form of model we use varies from industry to industry, in each case being determined, as per
standard practice, by the prevailing features of the industry data being examined.
Common to our analysis of every industry is the use of vector autoregressions. They allow us to forecast a variable using more than
its own history as explanatory information. For example, when forecasting oil prices, we can include information about oil
consumption, supply and capacity.
When forecasting for some of our industry sub-component variables, however, using a variable's own history is often the most
desirable method of analysis. Such single-variable analysis is called univariate modelling. We use the most common and versatile
form of univariate models: the autoregressive moving average model (ARMA).
In some cases, ARMA techniques are inappropriate because there is insufficient historic data or data quality is poor. In such cases we
use either traditional decomposition methods or smoothing methods as a basis for analysis and forecasting.
We mainly use OLS estimators, and in order to avoid relying on subjective views and encourage the use of objective views, Fitch
Solutions uses a 'general-to-specific' method. We mainly use a linear model, but simple non-linear models, such as the log-linear
model, are used when necessary. During periods of 'industry shock' (for example, poor weather conditions impeding agricultural
output), dummy variables are used to determine the level of impact.
Effective forecasting depends on appropriately selected regression models. Fitch Solutions selects the best model according to
various different criteria and tests, including but not exclusive to:
• R2 tests explanatory power; adjusted R2 takes degree of freedom into account

• Testing the directional movement and magnitude of coefficients
• Hypothesis testing to ensure coefficients are significant (normally t-test and/or P-value)
• All results are assessed to alleviate issues related to auto-correlation and multi-collinearity
Fitch Solutions uses the selected best model to perform forecasting.
Human intervention plays a necessary and desirable role in all of Fitch Solutions' industry forecasting. Experience, expertise and
knowledge of industry data and trends ensure analysts spot structural breaks, anomalous data, turning points and seasonal features
where a purely mechanical forecasting process would not.
Sector-Specific Methodology
A number of criteria drive our forecasts for each IT variable.
IT forecasting is complicated due to the fragmented nature of the market, with little transparency of vendor data and low apparent
agreement between many sets of figures in terms of market definition, base and methodology. In addition, forecasts are affected by
consideration of a variety of internal and external political and economic factors.
Within best-practice techniques of time-series modelling, our quarterly updated forecasts are improved substantially by intimate
knowledge of the prevailing features of each local market.
fitchsolutions.com
Risk/Reward Index Methodology
Individual variables taken into account in creating each forecast include:
• Overall economic context, and GDP and demographic trends

• Underlying 'information society' trends
• Projected GDP share of industry
• Maturity of market structure
• Regulatory developments and government policies
• Developments in key client sectors such as telecommunications, banking and e-government
• Technological developments and diffusion rates
• Exogenous events
Estimates are calculated using our own macroeconomic and demographic forecasts.
Sources
Additional sources used in IT reports include national ministries and ICT regulatory bodies, national industry associations, and
international industry organisations such as the International Telecommunication Union (ITU), officially released company results
and figures, and international and national industry news agencies.
Fitch Solutions’ proprietary Risk/Reward Index (RRI) provides a comparative regional ranking system evaluating the ease of doing
business and the industry-specific opportunities and limitations for potential investors in a given market. The RRI system divides into
two distinct areas:
Rewards: Evaluation of sector's size and growth potential in each state, and also broader industry/state characteristics that may
inhibit its development. This is further broken down into two sub-categories:
Industry Rewards (an industry-specific category taking into account current industry size and growth forecasts, the openness of
market to new entrants and foreign investors, to provide an overall score for potential returns for investors).
Country Rewards (a country-specific category, factoring in favourable political and economic conditions for the industry).
Risks: Evaluation of industry-specific dangers and those emanating from the state's political/economic profile that call into
question the likelihood of anticipated returns being realised over the assessed time period. This is broken down into two sub
categories:
Industry Risks (an industry-specific category whose score covers potential operational risks to investors, regulatory issues inhibiting
the industry and the relative maturity of a market).
Country Risks (a country-specific category in which political and economic instability, unfavourable legislation and a poor overall
business environment are evaluated to provide an overall score).
We take a weighted average, combining industry and country risks, or industry and country rewards. These two results in turn
provide an overall Risk/Reward Score, which is used to create our regional ranking system for the risks and rewards of involvement
in a specific industry in a particular country.
For each category and sub-category, each state is scored out of 100 (100 being the best), with the overall Risk/Reward Score a
weighted average of the total score. As most of the countries and territories evaluated are considered by Fitch Solutions to be
fitchsolutions.com
'emerging markets', our score is revised on a quarterly basis. This ensures the score draws on the latest information and data across
our broad range of sources, and the expertise of our analysts.
Sector-Specific Methodology
In constructing these indices, the following indicators have been used. Almost all indicators are objectively based.
IT RISK/REWARD INDEX INDICATORS

Rationale
Rewards
Industry
IT market value, USDbn Denotes breadth of IT market. Large markets score higher than smaller ones.
Sector value growth, % y-o-y Denotes sector dynamism. Scores based on annual average growth over five-year forecast period.
Denotes spending boost provided by public sector, which can be a crucial determinant of sector
Government initiatives and spending
development.
Denotes maturity of market. A high proportion of hardware sales, compared to services/software,

Hardware, % of total sales
indicates that the overall IT market is immature.
Country
Urban-rural split Urbanisation is used as a proxy for development. Mainly rural states score lower.
GDP per capita, USD A high GDP per capita supports long-term industry prospects.
Overall score for Country Rewards is also affected by the coverage of the power transmission network across the state.
Risks
Industry
Markets with fair and enforced IP regulations score higher than those with endemic
Intellectual property (IP) laws
counterfeiting.
Subjective evaluation of official policy towards IT development, as enshrined in statute and tax
ICT policy
code.
Country
Score from Fitch Solutions' Country Risk Index (CRI). It evaluates the vulnerability to external
Short-term external risk
shock, which is the principal cause of economic crises. Such a crisis would cut investment.
Score from CRI, to denote risk of currency crisis and stability of banking sector. The former would
Short-term financial risk
hit revenues in hard currency, while the latter would curtail investment funding.
Trade bureaucracy Score from CRI to denote ease of trading with the state.
Score from CRI denotes the strength of legal institutions in each state - security of investment can
Legal framework
be a key risk in some emerging markets.
Bureaucracy Score from CRI denotes ease of conducting business in the state.
Score from CRI denotes the risk of additional illegal costs/possibility of opacity in tendering/
Corruption
business operations affecting companies' ability to compete.
Source: Fitch Solutions
fitchsolutions.com
Weighting
Given the number of indicators/datasets used, it would be wholly inappropriate to give all sub-components equal weight. The
following weighting has been adopted:
WEIGHTING OF COMPONENTS
Component Weighting, %
Rewards 70, of which
- Industry 65
- Country 35
Risks 30, of which
- Industry 40
- Country 60
Source: Fitch Solutions
fitchsolutions.com
Fit
Fitch
ch Solutions, 30 North C
Colonnade
olonnade,, Canary W
Wharf
harf,, L
London.
ondon. E14 5GN, UK
Tel: +44 (0)20 7248 0468
Fax: +44 (0)20 7248 0467
Web: www.fitchsolutions.com
IS SN: 2044-9615
ISSN:
Copy Deadline: October 2021

opy
© 20
2021
21 Fit
Fitch
ch Solutions Gr
Group
oup Limit
Limited.
ed. All rights rreserv
eserved.
ed.
All information, analysis, forecasts and data provided by Fitch Solutions Group Limited is for the exclusive use of subscribing persons or organisations (including those
using the service on a trial basis). All such content is copyrighted in the name of Fitch Solutions Group Limited and as such no part of this content may be reproduced,
repackaged, copied or redistributed without the express consent of Fitch Solutions Group Limited.
All content, including forecasts, analysis and opinion, has been based on information and sources believed to be accurate and reliable at the time of publishing. Fitch
Solutions Group Limited makes no representation of warranty of any kind as to the accuracy or completeness of any information provided, and accepts no liability
whatsoever for any loss or damage resulting from opinion, errors, inaccuracies or omissions affecting any part of the content.
This report from Fitch Solutions Country Risk & Industry Research is a product of Fitch Solutions Group Ltd, UK Company registration number 08789939 (‘FSG’). FSG is an
affiliate of Fitch Ratings Inc. (‘Fitch Ratings’). FSG is solely responsible for the content of this report, without any input from Fitch Ratings. Copyright © 2021 Fitch Solutions
Group Limited.


United Kingdom Information Technology Report 2022

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

United Kingdom Information Technology Report 2022

Uploaded by

Copyright:

Available Formats

Q1 2022

EMISPDF tr-bogazici-demo from 193.140.201.95 on 2023-04-04 09:07:31 BST. DownloadPDF.

Industry Risk/Reward Index ....................................................................................................................................................12

Industry Trends And Developments .....................................................................................................................................25

United Kingdom Demographic Outlook...............................................................................................................................35

Information Technology Methodology.................................................................................................................................38

Uncertainty Hangs Over A Positive Core Scenario

f = forecast. Source: Fitch Solutions

Latest Updates And Industry Developments

Industry Trends - IT Market

f = forecast. Source: Fitch Solutions

Purchasing Power And Demographic Trends

f = Fitch Solutions forecast. Source: ONS, Fitch Solutions

ENTERPRISE TRENDS - GVA BY VERTICAL (UNITED KINGDOM 2019-2025)

IT INDUSTRY - HISTORICAL DATA AND FORECASTS (UNITED KINGDOM 2019-2025)

Industry Risk/Reward Index

Cloud Computing And Software Driving Growth In Europe

EUROPE IT RISK/REWARD INDEX, Q122

Germany 91.7 90.0 90.0 79.2 88.8 0.0 1

UK 88.3 90.0 90.0 74.8 86.5 0.0 2

Sweden 81.7 95.0 80.0 86.8 85.7 5.3 3

Netherlands 80.0 95.0 90.0 81.8 85.2 0.8 4

France 86.7 90.0 90.0 71.3 85.1 0.6 5

Denmark 73.3 95.0 90.0 84.6 82.7 0.0 6

Belgium 75.0 100.0 90.0 71.2 82.2 0.0 7

Finland 70.0 90.0 90.0 88.3 80.6 0.0 8

Ireland 78.3 80.0 90.0 80.8 80.6 0.0 9

Spain 78.3 85.0 90.0 64.4 78.9 0.0 10

Switzerland 73.3 85.0 90.0 73.1 78.2 0.0 11

Italy 80.0 80.0 90.0 62.7 78.1 -0.8 12

Austria 71.7 80.0 90.0 78.0 77.0 0.0 13

Portugal 65.0 70.0 90.0 74.4 70.9 0.0 14

Greece 61.7 75.0 90.0 53.5 66.9 0.0 15

Poland 66.7 60.0 50.0 70.9 63.8 0.0 17

Hungary 55.0 65.0 50.0 71.4 59.8 0.5 18

Turkey 66.7 55.0 52.5 50.9 59.3 1.5 19

Slovenia 45.0 70.0 60.0 77.8 58.8 0.0 20

Croatia 56.7 60.0 50.0 58.5 57.0 0.3 21

Bulgaria 58.3 55.0 45.0 58.1 55.9 -0.1 22

Russia 65.0 55.0 30.0 44.3 54.6 0.0 23

Romania 56.7 50.0 55.0 54.4 54.4 0.0 24

Serbia 58.3 45.0 45.0 46.5 51.3 0.0 25

f = forecast. Source: Fitch Solutions

Source: Ofcom, Fitch Solutions

f = forecast. Source: Fitch Solutions

Source: Statcounter, Fitch Solutions

Printer, Copier And Multifunctional Peripherals

Printer And Copier Spending Forecast

f = forecast. Source: Fitch Solutions

Servers And Storage

Software And IT Services

Software & Services Market

f = forecast. Source: Fitch Solutions

ENTERPRISE SOFTWARE ADOPTION BY FIRM SIZE AND VERTICAL, % (2019)

SMEs (10-249 employees)* 23 33 29 32

Large enterprises (250+

Wholesale and retail trade 18 29 29 32

Transportation and storage 20 26 20 22

Real estate activities na 36 na 38

Professional, scientific and

Administrative and support

Consulting, Maintenance And Systems Integration

Big Data Utilisation