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Global IT spending growth will plateau in 2009 but will begin to spike sooner or later by next year, assuming the pattern of recovery after the last two recessions holds true. Having studied spending trends after 1990 and 2001, Computer Economics said almost two-thirds of IT outfits were likely to post modest rises by early 2010. The firm’s prediction rests on the fact that the adverse impact of a shrinking economy has never contracted IT spending on equipment and software for more than two years. Yet a return to double-digit growth in IT spending, as seen after the 1990 recession, appears “highly unlikely,” as growth then was fuelled by Y2K and the internet boom. Operational budgets for IT will be notched up by 2 or 3 per cent next year, while software and equipment spending will fare better, with growth of at least 5 per cent. However, CE’s forecasts rest on the IT spending pattern after 2001, and it is the 1990 recession that is more similar to today’s, given it too was led by the financial sector. The current economic decline is also more like the one of 1990 in that IT outfits cut operational budgets quickly, at sight of the toughening fiscal and business conditions. This anticipation of the contraction in the global economy on the part of executives explains why the recovery of IT budgets could be as soon as early next year. “IT executives have generally been showing spending restraint even before the current recession,” said Frank Scavo, president of Computer Economics. “[So] there is not a great deal of excess equipment or personnel that need to be shed to bring IT spending in line with corporate revenues.” The firm tempered: “Of course, if the current recession is deeper or lasts much longer than usual, the recovery could begin later in 2010 rather than earlier.” Jan 6, 2009 Email this article Printer friendly page Previous Page
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