Global IT spending falls

Information Technology Information technology (IT) spending is expected to fall nearly 4% this year, the biggest slowdown since the dotcom bust of 2001, market research firm Gartner said on Tuesday.

Gartner forecast that worldwide IT spending would decline 3.8% in 2009 to $3.2 trillion from last year's $3.4 trillion.

"IT organisations worldwide are being asked to trim budgets, and consumers are cutting back on discretionary spending," said Richard Gordon, research vice president and head of global forecasting at Gartner.

"The speed and severity of the response by businesses and consumers alike to these economic circumstances will result in an IT market slowdown in 2009 that will be worse than the 2.1% decline in IT spending in 2001 when the internet investment bubble burst," he said in a statement.

Gartner lowered its forecasts for all four key market sectors - hardware, software, IT services and telecommunications.

It forecast spending on computing hardware in 2009 of $324.3bn, a decline of 14.9% from the $381bn spent last year, when the sector recorded growth of 2.8% over the previous year.

Software spending was predicted to rise by a marginal 0.3% this year to $222.6bn from the $221.9bn spent last year.

IT services spending was forecast to fall 1.7% to $796.1bn from the $809.5bn of 2008. Telecommunications spending was expected to fall 2.9% to $1.89 trillion from the $1.95 trillion spent in 2008.

Gartner said government stimulus package spending "will not be able to offset this bleak near-term outlook. "Until global financial markets stabilise, global GDP growth, including IT spending, is unlikely to strengthen," it said.

"IT vendors should plan for business and consumer spending to be curtailed during 2009 and for a slow, prolonged recovery during 2010," Gordon said.

Another firm, Forrester Research, meanwhile, revised its outlook for US business and government purchases of IT goods and services in 2009, saying they would decrease by 3.1% compared with a previously projected 1.6% annual increase.

"The credit crunch is still causing companies to dramatically cut back on all forms of capital investment, including many IT goods and services, and this will affect 2009 revenues for most IT vendors," said Andrew Bartels, Forrester Research vice president and principal analyst.

Forrester said it expects growth in IT investment will resume in the fourth quarter of 2009 in the United States and gather strength in 2010.

"There is a light at the end of the tunnel - demand has been delayed but not cancelled," said Bartels. "Growth will come back strong once the recession and tight credit conditions start to ease."