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US IT spending to rally in 2002

IT spending by US companies is expected to recover this year, with IT executives in North America spending 2.3% more on computer hardware, software and services than in 2001, says a study published by Forrester Research.

According to Forrester's "Business Technographics North America Benchmark Study", IT spending in consumer services and retail will grow by about 7% this year.

The Forrester survey was based on interviews with 1,001 technology executives at North American companies with annual revenue of $500m (£326m) or more.

The survey was cautiously optimistic about IT spending during the second half of the year, with 19% of the companies surveyed indicating an intention to raise IT budgets by the end of 2002. On the down side, 12% said they were planning to cut their IT budgets.

Of those executives who said they would increase their IT budgets, 37% intend to raise them by more than 10%, according to Forrester. More than half of respondents described their executives as willing to "spend what it takes" on IT, as compared with 36% who expressed the same sentiment at the beginning of the year.

The survey cautioned that mid-market companies, defined as those with annual revenue below $1bn, would not be a growth market for IT vendors this year as they were not planning to spend money on IT items other than enterprise resource planning (ERP) software.

The most profitable products in the services market would be "specialised, smaller-scale offerings", while data dissemination products like portals and business intelligence software would carry the software market, according to the survey.

Last month, IDC issued a slightly more optimistic forecast in a study predicting total worldwide IT spending of $981bn in 2002, an overall increase of 3.7% over 2001.

According to IDC, IT spending in the US is expected to increase by 3% this year over 2001 to $436bn, with further growth of 9% in 2003.

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