IT spend to decline

By Staff Writer for Gartner
Johannesburg, 01 Apr 2009

The unprecedented decline of the global economy is impacting the IT industry, with worldwide IT spending to decline this year by 3.8%, to reach $3.2 trillion, according to Gartner. The global analyst firm says last year's IT revenue reached nearly $3.4 trillion.

Richard Gordon, research VP and head of global forecasting at Gartner, urges IT vendors to help consumers cut costs, comply with government regulations and take advantage of government rescue plans: “IT organisations worldwide are being asked to trim budgets, and consumers are cutting back on discretionary spending.

“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.”

In a broad-based slowdown, Gartner forecasts that all four of the key market sectors of hardware, software, IT services and telecommunications have been revised downward, with only software spending growth remaining positive.

According to Gartner's research, computing hardware has been the hardest hit, suffering a 14.9% decrease in growth.

Although government stimulus packages will likely be important in the long-term, they will not be able to offset the bleak near-term outlook. Until global financial markets stabilise, global GDP growth, including IT spending, is unlikely to strengthen, the analyst firm says.

The slowdown in IT spending will reduce new market penetration and will slow replacement activity, Gartner adds. The impact of reduced new sales will be more strongly felt in emerging markets, and businesses will turn to lower-cost products, extending their current purchasing agreements. A slow recovery in the market is forecast for 2010.