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Growth in IT spend at 10-year low

There is no sign of an end to the cautious spending by IT departments, with growth in expenditure in the third quarter of this...

There is no sign of an end to the cautious spending by IT departments, with growth in expenditure in the third quarter of this year falling to a 10-year low.

Although spending picked up during the second quarter of 2002, the latest results from the quarterly Computer Weekly/Kew Associates UK IT user expenditure survey show that growth dropped from 5.4% to 3.5% for July to September. Kris Wicka, principal at Kew, said total growth in 2002 may only amount to 4%.

Wicka warned that with the global economy on an uncertain course any moves to increase spending could be dangerously optimistic and things may get worse.

"We are still predicting more belt-tightening in the IT industry and this will result in harder bargaining," he said. "Barclays Bank has cut the wages of its 800 external contractors and the customised software market is flat." Wicka also predicted that the services industry will be pressed to drive costs down by users.

The Kew figures do not reflect changes in hardware and software costs. "There is only so much money in the pot and a lot of these changes will be covered by juggling the sums spent between each of these areas," said Wicka.

The general opinion from analysts is that it will be late 2003 at the earliest before the market improves.

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