infoTECH Feature

July 02, 2009

IT Market in U.S. to Decline by 5.1 Percent in 2009: Researchers

As the U.S. unemployment rate continues to climb and the economy struggles to right itself, global purchases of IT goods and services by businesses and governments in 2009 are expected to decline by 10.6 percent, according to new projections from a Cambridge, Mass.-based market research firm.
 
The latest quarterly update of Forrester (News - Alert) Research, Inc.’s IT spending outlook also projects a 5.1 percent decline in the U.S. annual IT market, compared with the 3.1 percent decrease previously predicted.
 
New data about large declines in business technology investment during the first quarter prompted Forrester to update its forecasts for technology spending. On a positive note, Forrester still expects growth in U.S. IT investment to resume in Q4 2009, and 2010 is expected to bring a revival of IT buying in other markets as well, according to Andrew Bartels, a Forrester analyst.
 
In May, Forrester predicted that the total U.S. information technology budgets would decline from $761 billion in 2008 to $750 billion in 2009, a decrease of 2 percent.
 
“While Q1 2009 saw a scary drop in purchases in the U.S. tech market, ironically, that is good news for the long run and we expect to see a stronger rebound sooner,” Bartels said. “The big drops are not precursors to further declines; rather, we think they are evidence of a temporary pause in U.S. tech purchases, which we expect to start recovering in Q4 as businesses realize that they overreacted in the first quarter.”
 
He added that the firm expects tech markets in Europe and Asia to recover in the first half of 2010.
 
Forrester uses several metrics to determine the health and size of the U.S. IT market quarterly and of the global IT market on an annual or as-needed basis. The data in the new Forrester forecast report focuses on IT purchasing – how much computer and communications equipment, software, IT consulting and integration services, and IT outsourcing that businesses and governments buy from technology vendors.
 
Looking at the 2009 global IT spending outlook by sector, Forrester anticipates lower investment than previously expected across all categories. Forrester projects purchases of computer equipment to be down by 13.5 percent, communications equipment buying to drop by 12.4 percent, software spending to decline by 8.2 percent, and purchases of IT consulting and outsourcing services to be 8.6 percent lower.
 

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Erin Harrison is a Senior Editor with TMC. To read more of her articles, please visit her columnist page.

Edited by Michael Dinan
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