Users bullish over outlook for recovery in IT spend

The IT profession is preparing for an upturn in the economy as the first signs of recovery begin to emerge after three gruelling...

The IT profession is preparing for an upturn in the economy as the first signs of recovery begin to emerge after three gruelling years of falling IT budgets, job cuts and stagnant salaries.

A raft of recent research by leading analyst firms suggests that the decline in IT spending has at long last bottomed out as IT suppliers begin to see stronger order books and the jobs market shows clear signs of recovery.

Rising investment in IT by the public and firms in the financial and media sectors appears to be driving the upturn, which has also seen demand for contractors and senior IT managers rise, Computer Weekly revealed last week.

Users across all sectors are spending money on customer relationship management software and integrating systems.

Investment bank and analyst Goldman Sachs predicts that IT spending will increase by between 3% and 5% next year.

Its research shows that 60% of European chief information officers plan to lift a three-year ban on new IT spending before the end of the year.

Worldwide shipments of PCs have risen by 10% this year and demand for servers in the UK is up by 14%, prompting renewed optimism among suppliers.

IT contractors are always the first to benefit from an upturn and recruitment agencies have reported renewed demand across all sectors with Windows NT, Unix, SQL and Visual Basic in particular demand.

Roger Ellis, chairman of the IT Directors Network, said, "We have passed the worst.

"There is evidence that the shoots of recovery are growing in the US and hopefully that will have a knock-on effect for the UK."

But David Roberts, chief executive of the Corporate IT Forum, sounded a note of caution. "The word on the corporate IT street is that people are still trying to reduce expenditure and should continue to do so."

Optimism at first signs of investment upswing

Kate Mountain, chief executive of the Society of IT Management

"The good news for the public sector is that firms should stabilise and we can be less worried about suppliers going out of business"

Ray Titcombe, council chairman at IBM Computer Users’ Association

"There seems to be a more positive atmosphere at the moment. Events have been better attended recently, which is a sign of recovery"

Ann Swain, chief executive for the Association of Technology Staffing Companies

"The clients were talking about hiring and starting new projects earlier in the year and now we are seeing it come into fruition. The top end of the market has picked up particularly for project managers, team leaders and business managers. Companies are at the earlier stages in the new project cycle."

Philip Virgo, strategic adviser to the Institute for the Management of Information Systems

"We have probably passed the bottom and are likely to see a recovery. That begins with contractors because people are not ready to employ permanent staff."

European IT chiefs plan more investment in 2004 >>

Top supply executives predict market upturn >>

Users to spend on ERP, CRM and integration >>

Read more on IT supplier relationship management

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