Decline in global IT spending

Forrester forecasts decline in global IT spending

Global spending on IT products and services will drop by 3% in 2009 to $1.66 trillion when measured in U.S. dollars, but will subsequently rebound by 9% in 2010, according to a Forrester Research Inc. study released today.

The market saw 8% growth during 2008, Forrester said. The economic recession in the U.S. and other countries is the main reason for the 2009 decline, followed by the stronger dollar, according to the report.

If measured in euros, global IT spending in 2009 "will be positive at 6%, but then slide to 3% in 2010, as the euro starts to revive against the dollar," the report states.

Forrester noted that "an ideal measure of global IT market growth would use a basket of local currencies, weighted for each geography's share of the global IT market." Under this system, IT spending will grow by 3% this year and 6% in 2010.

The forecast could be worse, according to Forrester Research analyst Andrew Bartels. "In this environment, bad news can actually be good news if it's not disastrously bad news," he said.

Some technology areas will do better than others. Software spending this year will remain flat over 2008, at $388 billion, while communications equipment, IT services and computer hardware expenditures will all see a drop, Forrester said.

Server virtualization technology is reducing the need for physical servers, Bartels said. Companies may also be holding off on refreshing their PC and laptop supplies, or even relying more heavily on smart phones, he added. "CIOs might be saying 'Our sales guys can do everything they need with a BlackBerry.' "

Meanwhile, industry-specific computing devices, such as next-generation RFID (radio frequency identification) systems, are seeing growth, Bartels said.

Forrester cautioned that its findings are based on the assumptions that the recession will ease starting in the second half of this year, and that the dollar's strength will drop somewhat.

Bartels cited factors such as lower-energy prices, an "unfreezing" of the commercial credit market and the prospect of a large stimulus package from the incoming Obama administration as reasons to believe the economy could turn around sooner than later. It may take longer for emerging markets to recover, he added.