IDC predicts software, services spending pickup

MUMBAI: Growth in spending on software and computer services worldwide is

expected to accelerate in the second half of 2002, leading IT research firm IDC

said.

IDC's revised estimates, which take into account the impact of the September

11 attacks on the United States, forecast an 11 per cent increase in spending on

software and nine per cent rise in spending on services in 2002. A summary of

its report is available on website www.idc.com.

But IDC predicts total worldwide IT spending will increase only one per cent

this year, compared to 12 per cent growth in 2000. Growth will recover slowly to

5.5 per cent by the end of 2002, it said. IDC forecast worldwide IT hardware

spending to decline by nine percent this year and by one per cent in 2002.

Hardware spending in Europe will decline four per cent this year and by a

further two percent in 2002, it said. IDC forecast PC spending in Japan to

decline by 16 per cent this year. "Services remains the bastion of the IT

industry, recording nine per cent growth worldwide despite the industry

slowdown," it said.

IDC said software spending will eventually recover to the strong growth rates

of previous years, driven by investment in e-business and other leading

application areas.

Good news for India


IDC's forecast is good news for India's vital software sector, dominated by
computer service providers which derive most of their revenue from foreign

clients. The United States alone accounts for more than 60 per cent of that

income from abroad.

The slowdown and uncertainty following the September 11 attacks on the World

Trade Center and Pentagon has caused the Indian software industry to lower its

export growth forecast for the current financial year to 30-35 per cent, from

40-45 per cent estimated in April.

India, whose software and computer service exports topped $6.2 billion in

2000/01, aims to reach the $50 billion mark for exports by 2008.

(C) Reuters Limited.