Two-Year Downturn in IT Spending Is Over, Researcher Says

Forrester forecasts an 8 percent uptick in 2010 global IT spending.

January 13, 2010

D.H. Kass

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Technology spending in the U.S. and worldwide will pick up noticeably in 2010, driven by government and businesses primarily buying computer hardware and software, according to a new report from Forrester Research Inc.

The researcher said that in 2010 global IT spending will climb by 8.1 percent to $1.6 trillion, with the U.S. posting a 6.6 percent increase to $568 billion in sales, reversing last year’s 8.2 percent U.S. decline and 8.9 percent global dip to escape the two-year economic nose-dive that has ebbed demand and seen sales and earnings plummet.

“The technology downturn of 2008 and 2009 is officially over,” said Andrew Bartels, Forrester vice president and principal analyst.

Bartels said that Forrester expects IT spending in the U.S. to outpace the general economic recovery.

“All the pieces are in place for a 2010 tech spending rebound,” he said. “In the U.S. the tech recovery will be much stronger than the overall economic recovery, with technology spending growing at more than twice the rate of the gross domestic product this year.”

Bartels suggested that the IT segment is entering a “new, six- to seven-year cycle of IT growth and innovation that Forrester calls Smart Computing,” which is based on “foundation technologies” such as service-oriented architecture (SOA), server and storage virtualization, cloud computing and unified communications.

“New technologies of awareness married to advanced business intelligence analytics make computing smart,” he said.

Measured by sector in U.S. dollars, Forrester expects worldwide sales of computer equipment to climb by 8.2 percent, communications equipment by 7.6 percent, software spending by 9.7 percent, IT consulting and system integration services by 6.8 percent and outsourcing services by 7.1 percent.

While the U.S. will not see the highest percentage gain in IT spending globally, based on hard dollars spent it will lead the world’s regions, Forrester said.

On a percentage basis, technology purchases in Western and Central Europe are expected to grow by 11.2 percent, boosted by the dollar’s decline against the euro. IT purchases in Canada will increase by 9.9 percent, in Asia Pacific by 7.8 percent and in Latin America by 7.7 percent. Eastern Europe, the Middle East and Africa will be the slowest growing region for IT sales in 2010, rising at a 2.4 percent clip.

Last January, Forrester predicted a 1.6 percent growth rate for 2009 for U.S. business and government purchases of IT goods and services, a meager spending boost from $564 billion to $573 billion. At the time, the researcher predicted that public-services spending and government spending would rise 4 percent and 2 percent, respectively.

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