Global IT spending to drop: Forrester

BOSTON – Forrester Research has changed its 2008 forecast for IT purchasing around the world, cutting its prediction by three points on the assumption of what it calls a mild U.S. recession.

The firm is still predicting increased IT spending, but has dropped its U.S. growth projection to 2.8 percent from 4.6 percent, and its global forecast to six per cent from nine per cent.

Forrester vice-president Andrew Bartels said in a statement that the forecast is based on the assumption a mild recession will hit the U.S. economy in the second or third quarter.

“While it is by no means certain that the U.S. economy will in fact experience a recession, the risks of one are high enough to justify a more conservative outlook for the IT market,” the statement said. The sheer size of the U.S. market is enough to affect spending globally, he added.

Forrester is pegging the global market for IT spending in 2008 at U.S.$1.7 trillion, and said IT purchasing grew at 12 percent globally worldwide and 6.2 per cent in the U.S. during 2007.

Region to region, the 2008 outlook varies, according to Forrester. Growth in central and western Europe will stand at five per cent this year, the company said. That is a substantial drop from 2007’s 15 per cent growth rate, but Forrester noted that the dollar’s weakness against the euro helped drive that performance.

Meanwhile, Eastern Europe, the Middle East and Africa are set for a strong year. Oil-producing nations like Russia and Saudi Arabia will see 12 per cent growth in 2008, Forrester believes, just a slight drop from last year.

The Asia-Pacific region will also see strong growth at nine per cent, but that figure represents a drop from the 15 percent rate posted in 2007, Forrester said.

Meanwhile, the U.S.’s overall share of global IT spending is still falling, dropping this year to 33 percent, Forrester said. That percentage stood at 40 percent in 2003, according to Forrester. The U.S. still has a healthy stake in software purchasing, however, with a 44 percent share of the worldwide market, the analyst firm said.

The picture is also mixed within various sectors. Software buying will grow eight per cent globally, the research company says, down from 11 per cent in 2007. In contrast, hardware will be especially stunted. The firm predicts investment growth in communications equipment will fall to 3 percent from last year’s 12 per cent tally; and growth in IT spending on personal computers, servers, storage devices and peripheral markets will drop to 4 percent from 12 percent last year.

IT outsourcing will grow by nine per cent while consulting and integration services will see a slowdown, the firm predicted.

Forrester analyzed financial reports from 46 large IT vendors, as well as data from the Organisation for Economic Co-operation and Development, in preparing the forecasts.