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IT spending recovery 'officially underway'

Stronger than expected US spending has led Forrester to adjust its 2010 forecast upwards, though the outlook isn't quite so rosy for European markets.

By Martin James, 9 Apr 2010 at 10:23

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Spending on IT is rebounding faster than expected and a recovery is officially underway, according to market analyst Forrester Research.

In January, the firm forecast global industry growth of 8.1 per cent for the year – reversing an 8.9 per cent decline in 2009 – with principal analyst Andrew Bartels saying the downturn was “unofficially over” and that “all the pieces are in place for a 2010 tech spending rebound”.

However, three months later that spending rebound has outstripped Forrester's initial forecast, leading Bartels to make the bolder assessment that the “tech recovery of 2010 is underway”.

According to the US and Global IT Outlook: Q1 2010, spending recovered in Q4 2009 after having hit rock bottom in the previous quarter to be “generally level with or slightly higher than the same period in 2008 — clear evidence that the downturn is over and that renewed growth has started”.

Spearheading the recovery is higher-than-expected spending in the US, with Forrester now having adjusted its predicted 6.6 per cent rise in IT spending to an 8.4 per cent increase. However, Forrester has adjusted its global forecast – measured in US dollars – slightly downward to $1.6 trillion, or 7.7 per cent growth, partly due to the dollar's strength against a euro weakened by the Greek economic crisis.

Spending on computer hardware and software will be particularly strong, with both sectors expected to record double-digit growth as businesses that delayed replacing or upgrading equipment during the downturn start spending again.

“I continue to see computer equipment and software as the strongest product categories in 2010, with PCs, peripherals, and storage equipment leading the computer category and operating system software and applications setting the pace for software,” Bartels wrote in a blog accompanying the report.

Consulting services and communications equipment are each expected to grow by seven per cent this year, while IT outsourcing – the only sector to show any growth at all last year – will expand by a modest four per cent.