Gartner downgrades IT spend forecast

17 August 2010

17 August 2010 | Nick Martindale

IT spend will not increase in 2010 by as much as previously thought, according to industry analyst Gartner.

Earlier this year the US-based research firm estimated the market would grow by 4.1 per cent but has now downgraded that to 2.9 per cent. This would still represent a healthy increase on 2009, when IT spend fell by 5.9 per cent from the previous year as the recession took hold.

The strongest growth is predicted in the utility and national/international government sectors, increasing by 4.7 per cent and 4 per cent respectively.

Other strong performers include communications, media and services (3.6 per cent), healthcare (3.2 per cent) and banking and securities (2.8 per cent).

The transportation sector, however, is expected to grow by just 1.9 per cent, and local and regional government by 1.7 per cent.

Overall spend on IT in 2010 will top $2.4 trillion (£1.5 trillion), Gartner predicted, and is likely to hit 3.5 per cent in 2011.

But Gartner also warned IT providers to prepare for a worst-case scenario of zero growth should austerity programmes be accompanied by a renewed slowdown in the commercial sector.

Kenneth Brant, research director at Gartner, said: “We’re advising our technology provider clients to prepare business plans for 2011 on the basis of our most likely scenario for enterprise IT spending growth of 3.5 per cent.

“However, they should act now to develop contingencies to mitigate the risk of zero growth in 2011; a scenario that carries a lower probability but a much higher potential impact.

“The bottom line is that technology providers need to be prepared for the worst case, where commercial IT markets stagnate and governments transition to fiscal austerity programmes.”

IT buyers were likely to be looking for applications that could enhance cost optimisation in their enterprise, added Brant, even if an economic recovery took hold.

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