The Hindu Business Line : ChangeWave says US spending would continue to decline

Bangalore, Nov. 28 In what could be a further dampener for the Indian IT Industry, a recent report by US-based ChangeWave Research has suggested that IT spending in the US would continue to decline in the first quarter of calendar 2009, and there would be no upswing until the third quarter or even later.

The US, the largest IT services market, accounts for over half of India’s IT export revenues.

US corporate IT spending is in the midst of a huge nosedive, the likes of which has not been seen before in a ChangeWave survey dating back to 2001, it said. This assumes significance for the Indian IT industry as technology budgets are generally agreed upon in January or February every year.

ChangeWave said an unprecedented 45 per cent of respondents said their company’s IT spending will either decrease or there will be no spending at all in the first quarter, and close to half of them now believe IT spending won’t pick up for their company until the third quarter of 2009, or later.

The corporate IT purchasing survey, conducted between November 6 and 12, included 1,926 respondents who are involved with IT spending in their organisation.

Disturbing aspect

What is most disturbing is that spending is plunging at a time of year when normally there are seasonal increases, ChangeWave said. For the current quarter, 39 per cent of respondents said they have spent less than planned, and just 8 per cent said they have spent more than planned.

Moreover, the survey brought to light the fact that in the aftermath of the US presidential election, respondents do not see any immediate improvement occurring in their company’s IT spending.

Some industry experts suggested that the completion of the elections would bring some stability and confidence to companies in the US, but had said that spending would ultimately depend on the economic recovery.

However, the survey said in spite of the crisis, the corporate smart phone market is actually showing growth. 35 per cent of respondents reported their company plans to buy smart phones next quarter.

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ChangeWave says US spending would continue to decline