IT spending bounces back a year earlier than expected – Gartner

22 Jan 2010

A slow but steady improvement in the macroeconomic environment in 2010 should support a return to modest growth in overall IT spending, according to Gartner, which reckons worldwide IT spending will reach $3.4 trillion in 2010 – up 4.6pc on last year.

Although modest, this projected growth represents a significant improvement from 2009, when worldwide IT spending declined 4.6pc. All major segments (computing hardware, software, IT services, telecom and telecom services) are expected to grow in 2010.

“Last quarter, we did not expect to see IT spending levels recover to 2008 levels until 2011, however, now, with the upward revision to the current dollar forecast, we are projecting that global IT spending this year will approach the level seen in 2008,” said Richard Gordon, research vice-president at Gartner.

“Our updated forecast for IT spending to reach US$3.4 trillion in 2010 is actually a year earlier than we expected levelling our previous forecast update, and reflecting a bounce back in underlying IT spending from the sharp drop in 2009.

“While this forecast might seem bullish at first, it’s important to factor in the impact that exchange rates will have on the markets,” Gordon continued.

“Much of the increase in our revised 2010 forecast can be attributed to a projected decline in the value of the US dollar compared to 2009,” he said.

Emerging regions take the lead

From a regional perspective, Gartner’s IT spending forecast reflects the economic situation in each region and country, with the emerging regions leading the way in terms of growth both in the short and longer term.

However, because of the scale of IT spending in North America and Western Europe, these regions weigh heavily in the global IT spending growth rate overall.

IT spending growth in emerging markets (with the exception of central and eastern Europe and some of the Gulf states) is expected to lead the way, with spending forecast to grow 9.3pc in Latin America, 7.7pc in the Middle East and Africa and 7pc in Asia/Pacific.

Recovery in Western Europe, the US and Japan will start more slowly, with Western Europe increasing 5.2pc, the US growing 2.5pc, and Japan increasing 1.8pc.

“As we begin 2010, multiple factors are conspiring to shape IT spending patterns in years to come,” Gordon said.

Projected growth areas

Computing hardware is expected to grow 1.6pc, software 4.9pc, IT services 5.6pc, telecoms 4.7pc and telecoms services 4.2pc.

“Although recovery will be slow, over the next 12 to 18 months, gross domestic product (GDP) is projected to increase, consumer confidence is expected to improve, and the availability of credit should increase.

“At the same time, pent-up demand for new technologies will be released as enterprises focus on new growth opportunities and increase spending plans. IT vendors and service providers must ensure that they are poised to take advantage of this improving landscape.”

By John Kennedy

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