Lull in economy creates timid IT business spend
Weaker economy sees businesses set to become more cautious with IT investment and expansion plans
IT spending in the electronics and professional services industries is expected to decline this year, according to separate reports from Gartner and the British Chambers of Commerce (BCC).
Businesses with more than $1bn in turnover will be cautious when making their IT spending decisions this year, according to Gartner’s Worldwide IT Benchmark Service.
This view is mirrored by the BCC report which questioned over 5,000 UK businesses and discovered that, despite business conditions improving slightly in the final quarter of last year, business remains flat.
Howard Rubin, an associate with Gartner, said: “While we see organisations moving away from reactive IT spending, there are a number of trends that are specific to each industry, geography and organisation size.”
Despite predicting a growth in IT spending for the electronics and insurance industries of 7.8 per cent and 6.5 per cent respectively this year, Gartner said this represents a decline from 8.3 per cent and 7.7 per cent respectively last year. However, the biggest decline will be in the professional services industry, with spending expected to drop by 1.7 per cent, from 10.1 per cent last year, according to Gartner.
David Kern, economics advisor at the BCC, said: “Business investment has been too low for too long. Businesses operate logically, but if the general environment is conducive to growth then they will invest and expand.”
A recent Ernst & Young report on profit warnings discovered that the number issued by UK listed companies increased by 39 per cent to 103 in the third quarter of last year.
However, Kern denied there was any correlation between its findings and those of Ernst & Young.
“There is no direct link to profit warnings, but businesses feel more confident investing when they see a period of sustained growth,” he said.