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Economic downturn will affect IT spend, says Forrester Research

The weakening global economy is going to start impacting IT budgets, says market watcher Forrester.

The analyst group has revised its 2008 IT spending predictions downwards in response to the growing threat of a recession in the US. It now believes that global spending on IT will increase by just 6% in 2008, to reach $1.7 trillion. Earlier figures from its analysts had suggested growth would be closer to 9%.

However, Forrester notes that in some areas IT spending will remain robust. Investments in software and IT outsourcing are predicted to hold up – software spending will rise by a healthy 8% while IT outsourcing will increase by 9%. Meanwhile, spending on computer and communications hardware is predicted to be an anaemic 3%.

In Europe, the brakes on spending will be applied vigorously. Forrester suggests that in 2007 IT spending was up 15%; it predicts a marked slowdown in 2008, with growth of just 5%. That figure looks even worse when currency fluctuations are taken into account – measured in euros, Forrester suggests IT budgets will grow by a mere 3% during 2008.

In a similar move, IT advisory group IDC has downgraded its guidance, suggesting growth in global IT spending for 2008 will be in the region of 5% rather than the 6% it previously predicted.

Further reading

Cisco spooks Wall Street with credit crunch caution

IBM issues good news early to ease investor anxiety

Financial services sector looks to IT to relieve credit woes