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Forrester Sees Big Slowdown In U.S. IT Spending
Bleak Numbers But Analysts Not Expecting The 15% and 20% Declines In Tech Purchases Of 2001 And 2002

by Maroushka Kanywani, Editor, Dashboard InsightWednesday, December 10, 2008

Written by Antone Gonsalves, Intelligent Enterprise

Forrester Research on Tuesday said IT spending growth in the United States would fall by more than 60% next year, as the nation's recession takes its toll on businesses.

The market researcher said spending would grow by only 1.6% in 2009, down from 4.1% growth this year. Forrester blamed the economic recession, saying there's no question the U.S. gross domestic product is falling.

"The question for the U.S. tech market is no longer whether the U.S. economy is in recession," the report said. "Instead, it is how long and deep the recession will be and how much damage will it do to the tech sector."

While the numbers are bleak, Forrester, which described itself as a "relative optimist," said it did not expect to see the 15% and 20% declines in tech purchases that occurred in the 2001 and 2002 tech downturn following the dot-com bust.

Nevertheless, computer equipment purchases are already in decline, and growth is slowing for spending on network equipment, software purchases, and IT consulting and outsourcing services. Computer equipment purchases are expected to continue dropping in the fourth quarter of this year and the first half of next year. Software growth is expected to slow to as little as 2% in coming quarters.

Forrester expected the recession to last only until mid-2009, with declines in real GDP of as much as 3.6% on a quarterly basis.

Forrester's projections followed by a couple of months a dismal forecast by Gartner. The analyst firm said the global economic downturn could cause worldwide growth in IT spending to drop to 2.3% in 2009. Gartner had projected a 5.8% increase.

Source: Intelligent Enterprise

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