IT spending cutbacks worse than after dot.com bust

Global IT spending is expected to decline nearly 4% in 2009 with the recession taking a greater toll on IT than the dot-com bust in 2001, according to analyst Gartner.

Share

Global IT spending is expected to decline nearly 4% in 2009 with the recession taking a greater toll on IT than the dot-com bust in 2001, according to analyst Gartner.

IT spending cutbacks worse than after dot.com bust "The IT market slowdown will be worse than 2001, that downturn was tech-related. Today there is a general slowdown in demand for products and services across the board and IT spending is not immune," said Richard Gordon, research vice president of global forecasting at Gartner, Tuesday on a conference call announcing the spending forecast.

Gartner reported that global IT spending will reach about $3.2 trillion (£2.2 trillion) in 2009, a 3.8% decline in growth from the $3.3 trillion (£2.3 trillion) spent in 2008 -- which was up 6.1% over 2007. The research firm adjusted its spending forecast downward across all segments. IT spending in 2001 saw a 2.1% decline, according to Gartner.

Rival analyst firm Forrester Research said in the US, IT spending will decrease by 3.1 percent in 2009, rather than a 1.6 percent increase it had previously projected.

“In many ways the biggest factor affecting the tech arket is not the recession but the breakdown of the financial system,” said Andrew Bartels, Forrester Research principal analyst.

“The credit crunch is still causing companies to dramatically cut back on all forms of capital investment, including IT goods and services.”

Gartner is predicting a 15% decline in global spending on hardware, flat software spending and IT services to decline 1.7% and telecoms nearly 3% .

Despite the promise of government stimulus packages in the long term, Gordon explained, they won't be able to offset the "bleak near-term outlook." Global financial markets have yet to stabilize, and that means IT buyers aren't confident on where to invest.

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

He urged IT vendors to prepare by “investing in research and development and focusing on building the proof points, case studies, and success stories about how their technology solutions have helped businesses."

"Recommended For You"

Forrester downgrades 2014 global IT spending forecast, citing weak first half Gartner: Spending slowdown 'not as bad' as dotcom bust