Corporate IT spending growth to slow

Businesses are planning to scale back their IT spending in the third quarter of 2007, according to a survey released by an investment research firm.

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Businesses are planning to scale back their IT spending in the third quarter of 2007, according to a survey released by an investment research firm.

IT spending usually slumps in May, but now the percentage of companies planning to increase their spending has fallen to its lowest point in the last four years. The portion of technology and business executives who plan to increase IT spending fell from 34% in November to 26% in May, according to the report from ChangeWave Research, a division of Phillips Investment Resources.

The survey also showed signs of weak spending throughout the second half of 2007, with the biggest slowdown hitting the server market. The portion of technology leaders who said their companies do not plan to buy any servers during the third quarter rose from 31% to 35%, the survey said. The results came from responses to a poll of 2,029 senior technology and business executives during the week of 15 May.

The forecast comes after Dell's announcement last week that it would lay off 10% of its 88,100 employees over the next 12 months, after profit fell slightly for the first quarter.

Dell fared the worst of all PC vendors in the survey, which showed that the number of businesses planning to buy Dell desktops and notebooks has fallen to its lowest level in two years. The portion of corporate buyers planning to purchase a Dell desktop over the next quarter fell from 45% in August 2005 to 34% now. The numbers for laptops were almost the same.

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