Gartner Gives IT Spending Projections for 2010 a Haircut
July 19, 2010 Timothy Prickett Morgan
The economic turmoil in Europe that is causing the decline of the euro against other currencies–namely the U.S. dollar where a lot of IT spending ultimately gets booked–have forced the analysts at Gartner to go back to the whiteboard and scribble some new numbers on it.
In its most recent projection from the first quarter of this year, Gartner said it expected IT spending to grow by 5.3 percent globally when reckoned in U.S. dollars, to just under $3.4 trillion. But now, thanks to the deflation of the Europe and the U.S. dollar strengthening, global IT spending is only set to grow by 3.9 percent to $3.23 trillion. That wipes out about $171 billion across hardware, software, services, and telecom costs. Some of that is funny money in that it was never coming back home to the U.S. dollar and some of that is real money lost that would have been booked back in the States by U.S-based IT firms.
Hardware expenditures fell by 12.4 percent to $334 billion in 2009, and now Gartner expects hardware revenues to rise by 9.1 percent, to $365 billion. (About two-third of that money is spent by consumers and companies to buy PCs.) We haven’t quite climbed out of the hardware well, but we are getting close to the stone rim where the light is shining up there. Software is not expected to grow as much, with a 2.6 percent decline in 2009 to $222 billion, but with a rise of 3.1 percent now expected for software spending in 2010, software is back out of the hole. Not so for IT services, which will only grow by 2.9 percent to $786 billion in 2010 according to the latest Gartner projections, but which fell by 5.3 percent, to $763 billion, in 2009. Telecommunications in its myriad forms is a huge IT expense, and really anchors IT spending. It dropped by 3.5 percent to just over $1.9 trillion in 2009, and will grow by 3.4 percent this year, kissing $2 trillion ever so lightly.
“Our latest IT spending forecast reflects the fact that the global economic outlook is stable but vulnerable to shocks in key regions and industries, which means that IT spending decisions are still scrutinized for value,” explained Richard Gordon, a research vice president at Gartner, in a statement accompanying the projections. “CEOs are targeting 2010 as a ‘return to growth’ year, and to enable growth strategies, CFOs expect increased IT spending. However, CIOs are seeing only marginal increases in budgets and are constrained to essential enterprise IT spending with discretionary spending still on hold. In the consumer sector, confidence is improving, although consumers are still wary of the threat of unemployment.”