Analysts hunt for silver lining in IT spending gloom

Global IT spending is expected to rise by almost 4% this year according to market research group IDC.

Global IT spending is expected to rise by almost 4% this year according to market research group IDC.

While IT spending on hardware is expected to fall by 4% in 2002, increased spending on software and services, particularly in the fourth quarter, will bring total worldwide IT spending to $981bn (£624bn) for the year, an overall increase of 3.7% on 2001, IDC predicted.

The IDC report said that the bottom of the market has already been reached and vendors can expect a gradual recovery in the third quarter of this year with real gains to be made in the fourth quarter.

IT spending in 2003 is expected to reach record heights, growing by 9% worldwide to top the $1trn mark for the first time, IDC said. Spending on hardware products will also recover next year, with 5% growth predicted.

The fourth quarter of 2001 was particularly hard hit after the 11 September terrorist attacks in the US but the market is now in recovery and should not suffer long-term effects from recent corporate accounting scandals such as those experienced by WorldCom, Xerox and Enron, IDC claimed.

As long as the US economy experiences a gradual recovery, it should take IT spending along with it, IDC said.

While companies will generally refrain from committing to buying IT products as part of new projects until 2003, some companies in the fourth quarter will spend money on "replacing products which have had extended lifecycles during the previous six quarters", the report suggested.

As a result, although there will be a recovery in IT spending in the fourth quarter, it will be uneven and will "not favour all IT vendors and market sectors at the same pace", IDC said.

In IDC's revised forecasts for IT spending, Western Europe can expect growth of 4% in 2002 and 6% in 2003, IDC said.

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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