IT spending tipped to recover in 2010

26 Feb 2009

IT spending in 2009 is tipped to grow just 0.5pc due to the continued erosion of the global economy, according to the IDC Black Book. A steep decline in global hardware markets is expected, while software and services are set to remain buoyant.

This is down from a November forecast of 2.6pc growth.

IDC said the greatest impact will be felt in global hardware markets, where overall spending growth will be minus 3.6pc this year, led by a steep decline in outlays for servers, PCs, and printers/MFPs.

By contrast, worldwide spending on software and IT services are each expected to grow 3.4pc in 2009, down from 4.6pc and 3.7pc growth respectively in the previous forecast. Worldwide IT spending in 2009 will be US$1.44 trillion.

In the US, IDC is now forecasting year-over-year growth of 0.1pc in overall IT spending, down from the November forecast of 0.9pc growth.

Paralleling the worldwide market, hardware will experience a sharp decline in spending with minus 16pc growth, while software and IT services spending will grow by 4pc and 3pc respectively. US IT spending will total nearly US$491bn in 2009.

“Fourth-quarter data from a number of key markets and geographies clearly shows that companies have been very quick to pull back their spending,” said John Gantz, chief research officer at IDC.

“The data also provides a clearer picture of how companies are curbing their expenditures. Investments in software and services are being maintained in pursuit of productivity and efficiency gains, while hardware spending is being slashed in an attempt to stretch refresh cycles and squeeze more out of existing assets,” Gantz said.

Overall IT spending in western Europe is now expected to grow 0.1pc year-over-year in 2009, down from the November forecast of 1.2pc growth. IDC expects IT spending in Germany and the UK to remain essentially flat in 2009, while France and Italy will experience negative growth.

The forecast for IT spending growth in Asia/Pacific (excluding Japan) has also been reduced, with overall growth now expected to be 1.4pc, down from the earlier forecast of 4pc growth. IT spending in China is expected to grow 6.5pc, down from 9.1pc, and India’s growth has been reduced to 5.7pc from 10pc.

Japan will experience year-over-year IT spending growth of minus 1.8pc in 2009, down from the previous forecast of 1.0pc growth.

“The revised forecast is very close to the downside scenario we developed in November, which was based on the lowest worldwide GDP growth since World War II,” noted Stephen Minton, vice-president, Worldwide Markets and Strategies at IDC.

“While the outlook for 2009 is now worse than we thought just three months ago, we still expect IT spending to recover somewhat in 2010 and gain momentum through the rest of the forecast period,” Minton said.

By John Kennedy

Pictured: Reva electric cars, one of the most common electric cars in the world

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years