IDC: Worst may be over for IT cutbacks

IDC: Worst may be over for IT cutbacks

The majority of companies surveyed for a recent IDC study expected to maintain or increase their IT spending in 2003, but those plans were tightly tied to worldwide economic stability, according to the research firm, IDC.

About 1000 chief information officers (CIOs) and chief executive officers (CEOs) were surveyed in 12 countries across the world. Of those polled, 85 per cent said they expected their IT budgets to either remain flat or grow in 2003 over last year.

But many organisations reported that they would revaluate their plans throughout the year and adjust spending in accordance with economic indicators and their confidence levels. Half of the CEOs polled cited low profits and a weak business climate as potential reasons to rein in IT spending,IDC said.

In 2002, "wild card factors" such WorldCom's collapse and the possibility of a US war against Iraq disrupted the IT market, program director of IDC's Worldwide IT Markets practice, Stephen Minton, said. The outlook for 2003 was shadowed by similar uncertainties, he said.

But organisations were hitting the limit on how long they could delay maintenance and upgrade spending. Cutbacks during the past two years had created a pent-up demand, Minton said.

IDC's study predicted that half of IT spending in 2003 would go toward routine infrastructure upgrades.

Vendors of storage hardware, PCs and network equipment were likely to see a sales surge because of demand for infrastructure equipment, IDC said in a summary of its study, CEO Perspectives -- Global IT Spending Plans for 2003.

The benefits of that surge would be mixed, IDC said, because price competition would continue to depress overall revenue in those sectors.

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