Global IT spending to weather US recession

Although the ongoing slump in the US economy is already having a negative impact on the growth of global IT spending, worldwide spending on technology will not be hurt drastically by the downturn in the US according to IDC.

The researcher is forecasting that growth in US IT spending this year will be seven per cent, down from 11 per cent in 2000. However, worldwide IT spending will stay healthy with growth of nine per cent this year.

There are so far no solid indications that the slump in US IT spending occasioned by the economic downturn will spread to Europe. Although the picture could change, in Europe, IT spending forecasts are still relatively strong. Attractive technologies for European nationals to invest in are Internet-related infrastructure, front-end applications and services.

The Asia-Pacific markets present a more mixed picture, with Japanese IT spending predicted to fall, while other countries's technology expenditure is set to soar. Japan is still have a rough time and its IT spending forecasts are lower than the rest. Overall IT spending in Japan is due to rise by only 6.5 per cent this year, compared with 7.5 per cent in 2000. That compares poorly with Australia, where IDC expects IT spending to grow more than 10 per cent in 2001.

The overall trend in almost every country is for increased spending on software and services and reduced spending on hardware, although in emerging markets, hardware still accounts for by far the largest slice of the IT pie. For instance, hardware sales in China last year were equivalent to around 90 per cent of the country's total IT expenditure, although that percentage should fall over the next three years to 80 per cent according to IDC.

In the US last year, hardware accounted for 40 per cent of IT spending, compared with 21 per cent for software and 39 per cent for services. This year hardware will account for 37 per cent of the total technology expenditure, while software will represent 22.5 per cent and services 40.5 per cent, according to IDC's forecasts.

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