Global IT spending by hedge funds will reach $1.35bn by the end
of this year, representing a decrease of 20.5% year-over-year, says
financial research firm Celent.
In a report,
Hedge Fund IT Spending: The Inevitable Contraction, Celent
assesses the consequences of the financial crisis and the resulting
reorganisation of capital markets on the hedge fund industry, hedge
fund IT spending and technology priorities.
With uncertainty surrounding capital markets and the scarcity of
credit likely to spill into 2009, a substantial
contraction in IT spending is inevitable, said Celent.
Growth rates will drop across all regions and contribute to
lower total spending. However, cuts will be more pronounced in
Europe and Asia, given the particularly dire performance of both
regions' hedge funds.
The overarching theme of IT strategies in 2009 will be a focus
on realising efficiency wins from existing applications
infrastructure, whilst lowering maintenance costs or at least
keeping the status quo, said Celent.
Spending on new technology will take a back seat. Unless faced
with a collapsing platform, large system acquisitions or
replacements are expected to be postponed.
"Approaches to thinking about and using technology will be
transformed. Many of these changes will be transitory, some
permanent. For the time being, cost-minimisation and operational
efficiency are at the top of the operational agenda," said Isabel
Schauerte, a Celent analyst.