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In what it calls the "perfect storm" of 2001, IT spending slowed down to an increase of only 1%, compared to 12% in 2000. Growth is predicted to rise to 5.5% by year-end 2002.
IDC has launched a study, code-named Operation Beacon, in an attempt to measure the impact on the IT economy post-September 11. It believes the recovery in 2002 will be gradual, led by software and services, with hardware markets remaining depressed until 2003. In the US, IT spending will drop by 2% over the course of 2001, with hardware showing a dramatic 18% fall. The hardware gloom will continue in 2002 with a further 7.5% decline.
Whilst Western Europe has not been impacted on the same scale as the US, there will still be small percentage drops in hardware spending over the course of both 2001 and 2002. Overall, European IT spend will rise by 5% this year, followed by a single percentage increase to 6% growth in 2002. Most markets are expected to pick up in 2003, with software spending growth predicted to lead the way with a 15% increase.
Launching the results, John Gantz, IDC chief research officer, claimed that despite the gloom, there is light at the end of the tunnel. "Technology is the best way for companies to increase the value they provide to their customers, to increase their profits, and to increase their productivity."