Green shoots of revival show as IT spend picks up

The first sign of a revival in IT spending emerged this week in an exclusive Computer Weekly survey which shows IT spending...

The first sign of a revival in IT spending emerged this week in an exclusive Computer Weekly survey which shows IT spending growth increasing after four quarters of decline.

Annual growth was 5.4% in the second quarter of this year, according to the latest Computer Weekly/Kew Associates IT expenditure survey, published every quarter. This compares with a 4.7% increase in the preceding quarter.

IT spending growth will return to double figures next year, with small and medium-sized enterprises (SMEs) leading the way, it found.

The survey, based on information from up to 60,000 businesses collected in June, predicts that the downturn in IT spend will end in 2003, with a 10% rise to £70.4bn.

The discrepancy in spending growth between companies with fewer than 500 employees and bigger firms is as marked as ever.

During the second quarter of 2002, SMEs' IT spend is expected to increase by 8.8%, compared to only 3.6% among larger companies.

Public sector spending growth, fuelled by government cash for putting services online by 2005, shows no sign of abating. It is expected to rise by 12.3% in the second half of 2002, in comparison to 9.5% for both the production and service sectors.

IT training budgets are expected to rise by a massive 25.6% in 2002, a figure matched only by spend to develop online information services, which is expected to rise by 24.1%.

Expenditure on outsourcing this year is expected to grow by 17%.

Most companies are freezing recruitment and reducing their use of contractors, cutting spending in this area by 10.7% in 2002.

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