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Tech spend to top $3.4tr
Recession? What recession?

By Ahsanul Islam

Published: Tuesday 19 August 2008

Despite a shaky global economic market, worldwide IT spending will pass the $3.4tr mark this year, up eight per cent from last year, according to analyst Gartner.

The decline of the US dollar is at the heart of this growth, although when adjusted to constant currency growth is still predicted to hit 4.5 per cent.

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Services, not products, now dominate spending, with IT and telecoms services making up 70 per cent of IT budgets, and telecoms alone accounting for almost $2tr of that.

Gartner VP Jim Tully said in the report: "The US-led economic downturn shows no sign of causing a recession in IT spending. Emerging regions, replacement of obsolete systems and some technology shifts are driving growth.

"Organisations are switching from company-owned hardware and software assets to per-use service-based models. The projected shift to cloud computing, for example, will result in dramatic growth in IT products in some areas and in significant reductions in other areas."

Software spending is on course for the strongest growth rate in 2008 at more than 10 per cent, while services spending will surpass 9.4 per cent growth.

Although many companies are in the middle of upgrade cycles to update and replace old software systems, Gartner warned this will not automatically equate to new software market growth.

Gartner managing VP Joanne Correia said in the report: "Cloud computing, web 2.0 and open source software are causing huge changes to the software market. Many of these factors are impacting market growth as enterprises replace assets with per-use services."

The main area of hardware growth activity is PCs, which accounts for 60 per cent of total hardware spending, increasing significantly in Asia-Pacific and Western Europe.

A strong shift towards mobile PCs is also occurring, boosting the overall market, as the higher prices of these products results in increasing revenue per unit.

However, a separate survey has revealed more than half (52 per cent) of UK IT directors are reporting cuts in their budget, despite 91 per cent saying they face greater demands in their departments than last year.

The survey, by Progress Software, also claims the UK is the country with the lowest likelihood for tech budget growth over the next five years as budget cuts have hit fewer companies around Europe.