IT FORUM – IDC moves to worst-case IT spending forecast

The terrorist attacks in the U.S. have moved market researcher International Data Corp. (IDC) to adjust its worldwide IT spending growth forecast to what previously was its worst-case scenario.

IT spending in 2001 is now expected to grow 7.9 per cent compared to last year. The predisaster forecast said spending would increase by 11 per cent. In 2002, IDC now expects IT spending to increase 8.5 percent, a ramp up to 2003 when it should grow 10.4 per cent, leveling out at 10.8 per cent in 2004.

“What was our worst-case scenario is now our probable case,” said John Gantz, chief research officer at IDC in a presentation at IDC’s European IT Forum here.

In 2000, worldwide IT spending was up 12 percent, totaling US$987 billion. This was a particularly good year for IT budgets, driven by a combination of millennium and euro preparations, IDC said.

Looking at the world, IDC said the U.S. is dragging down the worldwide forecast.

“Business conditions in the U.S. remain mostly challenging, with many companies continuing to hold back on spending. The fear is that the disaster could lead to a further decline in consumer confidence, which may compound the effects of the current economic slowdown,” said Vicky Hawksworth, research analyst IT markets at IDC.

Some sectors of the IT industry do benefit from a larger increase in spending, said Hawksworth.

“The downturn is dampening spending in some sectors of the industry such as hardware, which is already in saturation, and telecommunications. However, software and services remain relatively stable and some areas of services will even benefit from the downturn, such as outsourcing,” she said.

IDC is a subsidiary of International Data Group Inc., the parent company of IDG News Service.

IDC Corp. is at