IT spending to rise 5% in 2004, says IDC

Worldwide IT spending will grow 5% this year driven by an improving global economy and the need for users to resolve...

Worldwide IT spending will grow 5% this year driven by an improving global economy and the need for users to resolve infrastructure problems, said market researcher IDC.

Growth is coming back to IT spending after two years of decline in 2001 and 2002. Last year IT spending was up 2% over the previous year, said IDC chief research officer John Gantz.

Worldwide IT spending was $871bn (£471bn) in 2002, according to a December IDC report.

IDC's 5% growth forecast for 2004 is 1% above that of worldwide IT buyers recently surveyed by the research company.

There is pent-up demand that buyers did not report and governments will likely spend more, Gantz said.

The survey showed that US buyers expected a 5% IT spending increase, Western European buyers predicted a 2% rise, in Japan a 3% rise, while in Asia Pacific a 7% growth, resulting in a worldwide average of a 4% increase, he said.

While an improving economy and necessary infrastructure upgrades are the expected drivers for IT spending in 2004, other motivators listed by US IT buyers in a recent survey are more interesting.

"What I like is new product innovation and customer demand," Gantz said. New product innovation was listed by about a quarter of respondents, and customer demand by just under a third.

As spending picks up, IT departments are also less focused on cutting costs.

"Cost cutting has finally moved down the stack," he said. Users in the IDC survey described infrastructure and software as more of a priority for IT than cutting costs.

IDC has forecast that worldwide IT spending will pass the $1trillion mark in 2006 and hit $1,041bn and $1,108bn in 2007.

Joris Evers writes for IDG News Service

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