IT spend to return to 2008 levels

Boosted by expenditure in emerging markets, worldwide IT spend in 2010 will return to levels reached two years ago, according to research analyst Gartner.

Worldwide IT spending will reach US$3.4 trillion in 2010, a 4.6 percent increase from last year, with emerging markets leading the growth, predicted research house Gartner.

In a statement Tuesday, the research firm said the growth is a "significant improvement" from 2009 which saw a 4.6 percent year-on-year decline in IT spending. Almost all major segments--hardware, software, IT services and telecom--are expected to achieve growth, it added.

Worldwide IT Spending Forecast (US$ billion)
2009200920102010
SpendingGrowth%SpendingGrowth%
Computing hardware326.4-13.9331.71.6
Software220.7-2.1231.54.9
IT services780.9-3.5824.25.6
Telecom1,887.7-3.61,976.64.7
All IT3,215.7-4.63,364.04.6
Source: Gartner (January 2010)

According to Richard Gordon, research vice president at Gartner, the forecast of US$3.4 trillion is a year earlier than expected, based on earlier estimates.

"Last quarter, we did not expect to see IT spending levels recover to 2008 levels until 2011," he explained. "However, now, with the upward revision to the current dollar forecast, we are projecting that global IT spending this year will approach the level seen in 2008."

However, Gordon noted that the "bullish" forecast had factored in the impact of exchange rates. "Much of the increase in our revised 2010 forecast can be attributed to a projected decline in the value of the U.S. dollar compared to 2009," he said.

Emerging markets are expected to lead the way of IT spending growth, according to Gartner. The report noted that Latin America is forecasted to grow at 9.3 percent, with the Middle East and Africa recording 7.7 percent and the Asia-Pacific region, 7 percent.

In a video clip, Gordon explained that the emerging markets were not hit as badly in the recession. On the other hand, mature markets--United States and "most of Europe"--took a harder hit and therefore needed a bit longer to recover. With mature markets forming a substantial part of global spending, the longer recovery would hold back overall IT expenditure "a little bit", the analyst said.

Gordon added that Central and Eastern Europe and Japan were marked as lagging markets because they were quite severely affected by the recession.

In the statement, Gordon said multiple factors will shape IT spending patterns in years to come, although recovery will be slow. Over the next 12 to 18 months, gross domestic product (GDP) and credit availability are projected to increase, while consumer confidence is expected to improve, he noted.

"At the same time, pent-up demand for new technologies will be released as enterprises focus on new growth opportunities and increase spending plans," he added. "IT vendors and service providers must ensure that they are poised to take advantage of this improving landscape."