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IT Spending Growth Slowing to a Crawl

Blaming the economy, research firm IDC slashes its forecast for 2009 spending.
David McCann, CFO.com | US
November 13, 2008

Worldwide spending on information technology is expected to slow significantly next year as a result of the financial crisis.

Technology research firm IDC previously had forecast that spending in 2009 would rise by 5.9 percent. But, citing the financial turmoil since September, it revised its outlook downward to 2.6 percent growth. In the United States, IT spending is expected to be up just 0.9 percent, compared to the 4.2 percent predicted 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. "Technology is already deeply embedded in many mission-critical operations and remains critical to achieving further efficiency and productivity gains. As a result, IDC expects worldwide IT spending will continue to grow in 2009, albeit at a slower pace."

On a regional basis, spending growth in Japan and Western Europe, as well as the United States, is expected to hover around 1 percent in 2009. In contrast, the emerging economies of Central and Eastern Europe, the Middle East, 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, with growth rates approaching 6 percent in 2012.

In light of the uncertainties associated with the ongoing financial crisis, IDC also developed a downside scenario in which worldwide IT spending growth would fall to 0.1 percent in 2009 and spending would fall in the United States, Western Europe, and Japan.




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