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IT spending to rise 3.4pc in 2002 
Wednesday, October 09 2002
by John Cradden


Newly updated figures from Gartner and IDC show that worldwide IT spending in
2002 will increase marginally on 2001, with minimal spending on IT services. 

Worldwide IT spending will climb slightly in 2002, with revenue totalling USD2.3
trillion, a 3.4 percent increase on 2001, according to research firm Gartner
Dataquest.



"We expect the return to spending to begin with shorter-term less strategic
items, such as PCs, low-end servers and infrastructure software that can help
deliver more value out of systems and networks," said George Shiffler, principal
analyst for Gartner Dataquest's computing platforms and economics research. 

        

However, he warned that the global economic situation was still unstable and
risks of a further downturn could not be ruled out.



Worldwide IT spending is being led by the telecommunications sector, which is on
target to represent 58.4 percent of IT spending in 2002. IT services is the
second biggest segment, with end-user spending forecast to total USD557.5
billion, followed by hardware spending at USD323.3 billion.



Meanwhile, research firm IDC has said the IT services market will face a more
difficult year than originally predicted.  The firm has lowered its estimates
for worldwide IT services growth rate in 2002 to 6.7 percent, a reduction of 3.9
percentage points from the earlier forecast growth rate of 10.6 percent for the
year. 



However, IDC has also revised its 5-year-forecast and predicts that IT services
spending worldwide will increase to UDS572 billion by 2006, a compound annual
growth rate (CAGR) of 10.6 percent.



According to Ned May, program manager of IDC's worldwide services research, the
company revised its estimates because of a couple of market assumptions that
turned out to be false. 



"First, IDC expected enterprise spending in the first half of 2002 to be
stable. However, spending on many IT services actually declined during this
period. Second, the anticipated pick-up in demand by the middle of 2002 is now
not expected until the last quarter of 2002, and a full recovery is not expected
until the spring of 2003."



This revision of IT services spending has affected all regions, says IDC.  The
US, followed by Canada, saw the largest downward revision in forecasts for
spending in 2002 and beyond, while Japan, Eastern Europe, the Middle East and
Africa got off more lightly.