You win some, you lose some

IT spending growth will stay positive next year despite 2.5pc slowdown says global analyst IDC

Flashing the cash: UK tech spend to grow faster than US and Western Europe in 2009

Worldwide spending on IT is expected to slow in 2009 but still grow 2.6 per cent year on year – with the UK tipped to lead the US and even Western Europe slightly.

Latest analysis from market research firm IDC revises the global growth forecast downwards 2.5 per cent but still comes out positive overall.

Marcel Warmerdam, associate vice-president for EMEA IT markets research at IDC, said the UK IT market is expected to grow 1.3 per cent overall, slightly above Western Europe’s one per cent and leading the US’s 0.9 per cent.

“The maturity of the UK market prevents IT market growth from falling further behind, as the high outsourcing component in the UK market guarantees a relatively larger and more stable revenue stream,” Warmerdam told CRN.

The revised UK forecast is down 2.5 per cent from IDC’s last figures in July. Also, UK hardware sales will be hard hit and shrink 2.5 per cent, he added.

“Compared to the US, the UK outlook is slightly better,” Warmerdam said.

“We do think full recovery of the IT market in the UK will happen but will probably take longer than usual. It will be 2010 before we will see signs of recovery.”

David Ellis, director of e-security, professional services and training at Computerlinks, said the distributor’s partners remain positive overall about the coming year.

“The IT security and e-business infrastructure markets are pretty buoyant and we believe that they will be fairly immune from a market downturn,” Ellis said.

Security is and will remain a ‘must have’ for all organisations due, in part, to corporate governance and existing laws.

“Other products with clear business benefits and a measurable return on investment will also be in demand, such as those with a ‘green’ or virtualisation benefit,” Ellis said.

John Gantz, chief research officer at IDC in the US, said in a statement that the new prediction takes into account the global financial crisis that began in September 2008.

In July, IDC expected 2009 to achieve 5.9 per cent growth in IT spend worldwide, and 4.2 per cent in the US alone.

“Although all the economic forecasts went from up slightly to down drastically in a matter of days, the good news is that IT is in a better position than ever to resist the downward pull of a slowing economy,” Gantz said.

He said that since tech is deeply embedded in many mission-critical operations, it remains central to boosting efficiency and productivity.

“As a result, IDC expects worldwide IT spending will continue to grow in 2009, albeit at a slower pace,” Gantz said.

Spending growth in Japan, Western Europe, and the United States will hover around one per cent in 2009. Emerging economies will continue to grow but at much lower levels than the double-digit gains previously forecast, he said.

Software and services will enjoy solid growth while hardware, with the exception of storage, is expected to decline in 2009, Gantz said.

IDC expects IT spending to recover completely by the end of the forecast period with growth rates approaching six per cent by 2012. However, US$300bn in industry revenues will have been lost due to slower spending over the next four years.

The analyst firm also produced a ‘worse-case scenario’ to reflect the current uncertainty around the financial crisis, lowering global GDP for 2009 to 0.3 per cent.

That would cut the growth in global IT spending to 0.1 per cent and negative growth in the US, Western Europe and Japan – worse than any year since World War II.

Stephen Minton, vice-president for worldwide IT markets and strategies at IDC, said even that lowered scenario suggested IT would fare well compared to the previous downturn after September 11.

“Companies currently don't have the asset and spending ‘overhang’ that enabled them to put off purchases after Y2K and the dot-com bubble. As a result, there will be greater pressure for them to continue making IT investments in order to stay competitive,” Minton said.

IDC plans to publish forecasts for different market sectors and locations based on these latest predictions over the next few weeks.

“These forecasts are designed to provide a useful blueprint for companies reviewing their plans for 2009 and beyond,” according to the research firm.