IT spending projections down in December

CIOs surveyed last month predicted that IT spending would grow by just 6.7 per cent during the next 12 months, down from the 8.4 per cent growth rate they had predicted in November, according to the latest CIO Magazine Tech Poll, which was released Monday.

After reflecting an upward trend throughout most of 2004, the spending predictions in December fell to the second-lowest level of the year, according to the poll.

However, even as spending growth projections declined in most categories, expectations for investments in security software and storage sectors continued to rise, according to CIO. In addition, 53.3 per cent of the CIOs polled said they expect a moderate improvement in the overall IT market in the coming months.

“2004 showed a great deal of promise,” said Gary Beach, group publisher of CXO Media Inc., the company that publishes CIO magazine. Framingham, Mass.-based CXO Media is owned by International Data Group, which is also the parent company of Computerworld. “We witnessed a very positive upswing in tech spending and hiring and what seems to be a reopening of CIOs’ wallets. In 2005, I expect we will see continued slow but steady growth,” he said.

“However, with so many potential obstacles — such as energy prices, Sarbanes-Oxley and geopolitical uncertainty — it is unlikely we will see a bold transformation of IT in the coming year,” Beach said.

The IT job market continues to recover, with 13.6 per cent of respondents reporting that IT labor is hard to find — the highest level saying that in 38 months.

“CIOs are saying it’s getting harder and harder to find key, qualified IT workers,” Beach said. “Almost all the CIOs I’ve interviewed over the past three months said their turnover rate is up.”

The reason is because good workers who were happy to keep a job after companies started cutting positions and sending work overseas are now saying they’re tired of getting a three per cent increase, and they’re going to move to another job where they’ll get more money because of their qualified skills, he said.

Those skills include areas such as network infrastructure, wireless applications and Web services, Beach said. “From data we’ve seen for five or six months, CIOs are not prepared for an upcoming shortage of IT labor,” he said.

Each month, CIO magazine surveys a panel of IT executives on current and future IT spending and other IT issues. The survey is done in partnership with Ed Yardeni, chief investment strategist at Oak Associates Ltd., and Deutsche Bank Securities Inc.

The latest poll was conducted from Dec. 2 through Dec. 9. Eighteen per centof the 243 responses in December came from executives at companies with more than 5,000 employees.

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