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Global IT spending to hit US$2.6 trillion

Global IT spending to hit US$2.6 trillion

Global IT spending is expected to grow rapidly over the next five years, from a projected US$1.4 trillion this year to over $2 trillion in 2003, according to the latest report from SPS (Strategic Planning Services)/Spectrum Economics, a US-based economic consulting firm. By 2005, worldwide spending for IT products and services will reach $2.6 trillion.

In a study released Tuesday, entitled "Global Economic and Information Technology Market Forecasts, 2000-2005," SPS/Spectrum said that global industry and governmental annual spending for IT will increase at a steady 13 per cent compound annual growth rate between now and 2005.

Regionally, the report predicts that the fastest-growing regional IT markets will be Latin America and Middle East/Africa, followed by North America, Asia/Pacific and Europe, said Richard Carlson, chairman of Spectrum Economics.

"The fastest growing region is Latin America," Carlson said. "There's a certain stage that an economy hits where you have to massively computerize if you want to make the next (economic) jump, and that's where they are; they are building the IT infrastructure of a modern economy."

The other region experiencing fast IT growth, Middle East/Africa, is a nascent market whose current installed base of IT products and use of IT services is very low.

In Asia, the fastest growing markets are India and southeast Asia, he said. Japan topped the list for slow IT growth globally, however. Carlson noted that Japan has an "abysmal economy and (is) still surprisingly backward in a lot of key IT areas" such as the Internet and telecommunications.

The market segments that will experience the fastest growth are data communications, information services and software products, according to Carlson. Data communications is key because using networking products to tie systems together makes them more productive, he said.

"The hardware is still ahead of the software (in terms of performance), and every significant organization has got more hardware capacity" than they can use, Carlson said. "Data communications, better software and better services are how you get more bang for what you've already bought in terms of hardware," he added.

IT spending was broken down into five categories: information services, software products, equipment services, equipment and data communications.

This year, services spending will reach $4.5 billion, $2 billion will be spent on software products, and $2 billion for data communications. In 2005, however, $8.9 billion will be spent on information services, $4.3 billion will go toward software products, and $4.5 billion for data communications.

Meanwhile, research company International Data Corporation (IDC), pegged worldwide IT spending to reach $975.5 billion this year.


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