Canadian IT spending likely to remain healthy

A recently predicted US$150 billion slump in global IT sales, driven by a worse-than-anticipated European economic slowdown, represents only a worst-case scenario and is unlikely to alter earlier projections of solid growth in the Canadian technology sector, according to IDC Canada.

Initiated in January, the worst-case report, authored by IDC Canada’s U.S. parent company, indicated that the official projection of 11 per cent growth in the European sector could fall as low as 7.9 per cent if the U.S. economic slump spreads across the Atlantic. This scenario could lead to a US$50 billion less in demand for IT products and services from European customers, bringing the global shortfall to US$150 billion.

Despite the alarming figures, Francis Chang, manager of IDC Canada’s analysis group in Toronto, expects the country’s IT sales to follow official projections and grow at the healthy clip of nine per cent. Chang also noted that in IDC Canada’s most recent industry survey, 70 per cent of Canadian medium and large businesses expect their 2001 IT budgets to remain the same or even increase.

“When we play in a global economy we feel the pains and gains in the whole world,” Chang said. “Canadian businesses have already made adjustments based on [their numbers from] Q4 and we anticipate a healthy outlook going forward.”

Gaylen Duncan, president and CEO of the Information Technology Association of Canada is also sanguine about the stability of Canadian IT sales.

“IDC’s official figures are still the expectation, and we support them in that,” he told IT World Canada. Duncan also noted that even in IDC’s worst-case projection the sales dip is expected to end in early summer 2001, followed by a growth rebound.

Although nightmare-scenario studies have generated disturbing numbers, Duncan said when the economy is behaving unpredictably it is well worth doing examining highs and lows that are unlikely, but still possible.

“By saying ‘Let’s assume all forecasts are wrong’ we can even anticipate the supply and pricing problems that an unforeseen upswing can bring,” he said. “It’s an appropriate exercise.”

IDC Canada, in Toronto, can be reached at The Information Technology Association of Canada, with offices in Mississauga, Ont. and Ottawa, can be reached at