IT Spending Growth to Slow Significantly: IDC

FRAMINGHAM, USA: Worldwide spending on information technology will slow significantly in 2009 as a direct result of the global financial crisis that began in September 2008, said IDC.

The global provider in advisory services in its revised forecast said, worldwide IT spending will grow 2.6 per cent year over year in 2009, down from its pre-crisis forecast of 5.9 per cent growth.

In the United States, IT spending growth is expected to be 0.9 per cent in 2009, much lower than the 4.2 per cent growth forecast in August.

"Although all the economic forecasts went from up slightly to down drastically in a matter of days, the good news is that IT is in a better position than ever to resist the downward pull of a slowing economy," said John Gantz, chief research officer at IDC.

On a regional basis, spending growth in Japan, Western Europe, and the US will hover around one per cent in 2009.

In contrast, the emerging economies of Central and Eastern Europe, the Middle East and Africa, and Latin America will continue to experience healthy growth, but at levels notably lower than the double-digit gains previously forecast.

On a sector basis, software and services will enjoy solid growth while hardware spending, with the exception of storage, is expected to decline in 2009.

Looking beyond 2009, IDC expects IT spending to make a full recovery by the end of the forecast period with growth rates approaching 6.0 per cent in 2012.

Despite these gains, IDC estimates that more than $300 billion in industry revenues will have been lost due to slower spending over the next four years.

In light of the uncertainties associated with the ongoing financial crisis, IDC also lowered the forecast for worldwide GDP growth in 2009 to 0.3 per cent, which is 1.5 per cent lower than the current forecast and worse than any year since World War II.

"Although the revised forecast and the downside scenario both reflect a grim outlook for global economic growth over the next several years, IT spending actually fares well when compared to the previous downturn after the events of September 11, 2001," said Stephen Minton, vice president, Worldwide IT Markets and Strategies at IDC.