Global IT spending to increase 6pc this year

23 Mar 2006

Last year saw the fastest and most intense rate of growth in IT spending since Y2K, IDC said today, and the outlook for 2006 is that this expenditure worldwide will increase by 6.3pc. Factors contributing to this forecast include economic stability in the US, Europe and Japan combined with continued robust growth in emerging markets.

Growth, says IDC, will be strongest in the software market at 7pc, while hardware and services are both expected to post overall growth of 6pc this year.

“Last year, the intensifying infrastructure upgrade cycle drove IT spending to its fastest rate of growth since Y2K,” said Stephen Minton, vice-president of IDC Worldwide IT Markets. “Buyer activity really picked up in the second half of the year, contributing to improved margins and revenue for systems vendors and worldwide IT spending growth of 6.9pc for 2005.”

“IDC expects the upgrade cycle to weaken somewhat, leading to slightly weaker overall growth in 2006,” said Juan Orozco, program manager, IT Markets and Strategies. “There will be greater momentum, however, in project-based spending and key application areas, including business intelligence and content management, as enterprises return to a focus on the front-end, strategic importance of technology.”

In the US, overall growth in 2006 will be 5.8pc, a slight decline from the 6.4pc expansion of 2005. Strongest growth will be posted in network equipment, outsourcing services and system infrastructure software, including security tools.

Elsewhere, improving economic conditions are contributing to an enhanced outlook for IT spending in western Europe, where overall IT growth will reach 6pc this year. Asia/Pacific (excluding Japan) will enjoy 9pc growth in 2006, led by double-digit spending gains in China (14pc) and India (21pc).

“The global economy will remain stable and robust, with marginal changes in growth compared to 2005,” added Anna Toncheva, program manager and economist, IT Markets and Strategies.

“Although the engines of acceleration will rotate towards Japan and Europe, China and the US will remain at the helm. Given the increased focus on productivity and innovation during the current capex cycle, IT investments will dominate replacement spending in gross investment in the developed economies,” Toncheva said.

By John Kennedy