Information Age: News, analysis & insight for IT & business leaders

There is no sign of the economic recession affecting IT spending, says Gartner

Despite current economic woes, worldwide IT spending will grow by about 4.5% to $3.4 trillion in real terms in 2008, according to Gartner. The growth will actually be recorded as 8%, the research group says, but almost half of that can be attributed to the distorting impact of the decline in the US dollar against other currencies.

“The economic downturn shows no sign of causing a recession in IT spending,” says Jim Tully, vice president and distinguished analyst at Gartner. “In subsequent years we will see reduced growth, but the fundamentals remain strong. Emerging regions, replacement of obsolete systems and some technology shifts are driving growth.”

Gartner analysts said there are important strategic issues facing the IT industry.

“Organisations are switching from company-owned hardware and software assets to per-use service-based models. This will impact the industry in various ways,” says Tully. “The projected shift to cloud computing, for example, will result in dramatic growth in IT products in some areas and in significant reductions in other areas. In general, assets will be utilised with greater efficiency, and we are assuming that the overall effect on market growth will be neutral. We also recognise that there is considerable upside potential for higher growth.”

Worldwide software spending is on target for the strongest growth rate in 2008 at more than 10%. IT services spending ranks a close second with more than 9.4% growth but such numbers are significantly reduced when expressed in constant currencies.

IT spending is dominated by services rather than products. Together, IT services and telecom services account for 70% of total IT market spending.

Even larger, the telecom sector has a major effect on overall IT market performance, accounting for almost $2 trillion in 2008.

The main area of hardware growth activity is PCs, which represents 60% of total hardware spending. Growth in PCs is stronger than previously expected, with no signs of a slowdown. The US forecast has increased marginally while forecasts elsewhere, particularly across Asia/Pacific and Western Europe, have bincreased significantly.