Posted by: Linda Tucci
Gartner Inc. downgraded its forecast for 2010 IT spending worldwide, and now pegs growth at 2.9% rather than the 4.1% growth it forecast earlier this year. Spending numbers for the U.S. market are even more modest: The revised U.S. number is for an increase of 1.9% in IT spending in 2010, down from Gartner’s previous forecast of 2.9%.
Even those companies that have huge amounts of cash right now are not spending as much as Gartner expected, said Kenneth Brant, research director for Gartner, in a phone call about the report.
“Many are still playing wait and see with spending, and I don’t mean just IT spending but spending across the board,” Brant said. “We’re not seeing the cash on hand turn into hires or capital investment.” That’s not to say companies aren’t making any strategic investments. (Intel Corp.’s strong earnings suggest a PC refresh is coming, he said.) But the refresh likely will be set off by trims elsewhere, with the goal of keeping budgets flat. “That’s more the mood we’re seeing than anyone planning a 6% or 7% increase,” he said.
The uptick in 2010 IT spending, however modest, is still much better than the 5.9% decline in 2009 IT spending, of course. Moreover, the downgrade is not entirely due to an organic decrease in spending, explained Brant, but was due in part to the appreciation of the dollar in 2010 against the euro and other major currencies, which depresses the growth in the industry.
But altogether, the report is more evidence of the economy’s frail state in 2010, and consistent with recent news that the global economy is slowing.
Indeed, the possibility of weaker spending in 2011 is anticipated in the Gartner report, which comes with a warning that technology providers should prepare for zero growth in 2011, as “commercial IT markets stagnate and governments transition to fiscal austerity programs.”
“We keep hearing about consumer confidence,” Brant said. “Until corporate confidence returns, we are going to see very cautious approaches to IT spending in 2010 and 2011.”
The news does not surprise me, given my own conversations with CIOs over the past several weeks about what’s happened with 2010 budgets and what they’re anticipating for 2011. While IT staff cuts seem to be behind most folks, many are telling me that budgets are flat. I would like to hear what your IT spending looks like, as your companies face more economic uncertainty ahead.
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