The Hindu Business Line : Global IT spend to drop 3.8%, says Gartner

Bangalore, April 1 Hurt by the unprecedented decline in the global economy, the drop in IT spending in 2009 could be worse than 2001, and a recovery in 2010 could be slow and prolonged, a report by research firm Gartner Inc said.

The report forecasts a 3.8 per cent decline in worldwide IT spending to $3.2 trillion from nearly $3.4 trillion in 2008. It declined 2.1 per cent in 2001.

The speed and severity of the response by businesses and consumers to these economic circumstances would result in an IT market slowdown in 2009 that would be worse than 2001 when the Internet investment bubble burst, said Mr Richard Gordon, Research Vice-President and head of global forecasting at Gartner.

Gartner has cut forecasts for the key sectors such as hardware, software, IT services and telecommunications, with only software spending growth remaining positive.

Stimulus packages

Government stimulus packages would not be able to offset the bleak near-term outlook, although it would be important in the long term, Gartner said. The slowdown would reduce new market penetration and would slow replacement activity in mature markets.

Users would switch to lower-cost products, extend life of existing devices and stretch current contracts and purchase decisions, the report stated.

Gartner said global PC unit shipment would contract 9.2 per cent during the year, though the mini notebook units would grow. Virtualisation would be a drag on the server market, whereas storage would be the least impacted hardware product.

The software market would fare better than in 2001 as it is more mature, but it would be impacted by lower budgets and delays in hardware implementations. Spending on software maintenance would be largely preserved. Vendors with SaaS, virtualisation capabilities and a good Open-Source strategy would see opportunities, it added.

IT services spending decision would be delayed in the short-term because of the current business sentiment, and scrutiny on discretionary spends would result in the consulting segment declining the fastest. Spending on mission critical product support would be maintained and outsourcing would provide cost reduction opportunities, Gartner said.

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