IT Spending Projections for 2010 Boosted by Forrester

Published: August 16, 2010

by Timothy Prickett Morgan

Despite the worries among some economists that the U.S. economy might be heading for a double-dip and Europe might be dragged back into recession by the faltering economies in Greece, Spain, Portugal, Italy, and Ireland, the wizards at Forrester Research still think the prospects for the IT sector on a global basis are pretty good for 2010.

Andrew Bartels, who is a vice president and the principal analyst who builds the economic and IT spending models at Forrester, has put out a report saying that global IT spending will increase by 7.8 percent this year, hitting $2.46 trillion. IT spending in the United States will rise even higher, up 9.9 percent, to $753 billion. If you are talking just about core IT spending--meaning hardware, software, and services, but not telecommunications--then global revenues in 2010 are now projected by Forrester to hit $1.58 trillion, and the U.S. will see $564 billion in spending.

The phone bill on Earth for corporations is immense.

In his blog, Bartels said he was sticking by his IT spending forecast, saying his model never expected more than 2 to 3 percent of gross domestic product growth in the U.S. anyway and had already baked in assumptions that a number of economies in Latin America and the Asia/Pacific region could more than offset softness in Europe.

"Computer equipment and software will be the strongest categories, with PCs, peripherals, and storage equipment leading the computer category, and operating system software and applications setting the pace for software," Bartels explained in his blog referring to the latest IT spending forecast. "Communications equipment purchases are looking up, especially for enterprise and SMB buying. IT services growth will lag, with systems integration projects waiting for licensed software purchases to rise."

Interestingly, in that blog, Bartels is now projecting that, when measured in U.S. dollars, the Great White North of Canada will see the highest growth rate for IT spending in 2010, up an astonishing 16.2 percent. Latin America as a region will see 15.4 percent growth, which means Brazil, Argentina, and a number of other countries south of the equator on the South American continent must be doing well indeed. The Eastern Europe, Middle East, and Africa sub-region is expected to grow by 10.5 percent, while Forrester expects something just shy of a 1 percent decline in Western and Central Europe thanks to the weakening euro and economic sluggishness in these areas. The Asia/Pacific region, which includes India and China as well as a number of other countries that did alright despite the economic meltdown, is expected to see 11 percent growth in IT spending in 2010.

In local currencies--not brought back to the U.S. and converted to dollars--Latin America will grow 8.7 percent, compared to 2.2 percent growth for Western and Central Europe. Asia/Pacific will do 7.2 percent growth in local currencies, and Eastern Europe plus the Middle East and Africa will see a 7.6 percent bump.

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