IDC's hopes for IT spending recovery spring eternal

IDC's hopes for IT spending recovery spring eternal

While IT spending on hardware is expected to decline in 2002, increased spending on software and services, particularly in the fourth quarter, will bring total worldwide IT spending to $US981 billion for the year, an overall increase of 3.7 per cent over 2001, according to a study released on Wednesday by market researcher IDC.

Spending on IT hardware is expected to decline by 4 per cent in 2002, IDC said in a statement. But the good news, according to IDC, is that the bottom has already been reached when it comes to worldwide spending on IT and companies can expect a gradual recovery in the third quarter with real gains to be made in the fourth quarter.

IT spending in 2003 is expected to reach record heights, growing by 9 per cent worldwide to top the $1 trillion mark for the first time, IDC said. Spending on hardware products will also recover in 2003, with 5 per cent growth for the year, IDC said.

The fourth quarter of 2001 was particularly hard hit after September 11's terrorist attacks but the market is now in recovery, and should not suffer long-term effects from recent corporate accounting scandals such as those experienced by WorldCom, Xerox and Enron, IDC said. As long as the US economy experiences a gradual recovery, it should take IT spending along with it, IDC said.

While companies will generally refrain from committing to buying IT products as part of new projects until 2003, some companies in the fourth quarter will spend money on "replacing products which have had extended lifecycles during the previous six quarters", IDC said. As a result, though there will be a recovery in IT spending in the fourth quarter, it will be uneven and will "not favour all IT vendors and market sectors at the same pace," IDC said.

In IDC's revised forecasts for IT spending in 2002 and 2003, IT spending in the US is expected to increase by 3 per cent this year over 2001 to $436 billion, with further growth of 9 per cent in 2003.

Western Europe can expect growth of 4 per cent in 2002 and 6 per cent in 2003, IDC said. Though Japan will experience flat growth levels this year, by next year growth in the market will return to the tune of 7 per cent with particular strength shown in China, India, Korea, Russia, the Philippines, South Africa and Poland, IDC said.

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