Gartner Cuts Global IT Spending Forecast

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The analyst firm now says IT spending will drop by $200 billion this year, with unprecedented impact on all four major tech industry segments

Gartner has today revised down its previous global IT spending forecast for 2009, predicting the industry is set to make $200 billion (£123.6 billion) less than last year.

Worldwide IT spending is on pace to total $3.2 trillion (£1.97 trillion) in 2009, which is a six percent decline from 2008 spending of $3.4 trillion (£2.1 trillion).

In its first-quarter forecast in March, the analyst firm had said worldwide IT spending during this year would decline by 3.8 per cent.

Amid wider reports that worst of the economic recession is over, Gartner sounded a note of caution in its breakdown of which IT spending areas would suffer.

Unlike during the dotcom bust of 2001, it said all four major segments – hardware, software, IT services and telecommunications – would experience declining revenue.

“While the global economic downturn shows signs of easing, this year IT budgets are still being cut and consumers will need a lot more persuading before they can feel confident enough to loosen their purse strings,” stated Richard Gordon, research vice president and head of global forecasting at Gartner.

Overall, hardware was forecast to suffer the steepest decline in 2009, with spending projected to decline 16.3 per cent. By contrast, the software segment will fare best in 2009, with spending forecast to drop by only 1.6 per cent.

But he added that the decline in spending for hardware and software had begun to stabilise and so were subject to “only minor downward revisions” in this quarter’s forecasts.

“However, the full impact of the global recession on the IT services and telecommunications sectors is still emerging, and forecast growth in these areas has been further reduced significantly,” he said.

The forecast also said that ongoing currency exchange rate volatility would play a role in the slowdown.

“The rise in the value of the US dollar against most currencies in recent months will have a material downward impact on 2009 global IT spending growth, which by convention we report based on US dollars,” added Gordon.