Global IT spend to fall in 2009

Weakening economies is set to push spending on information technology products and services down 3% after seven years of continuous growth, according to Forrester Research.

The technology research firm said that recessions in the United States and other countries including Europe would be the main driver for slower technology spending. Recovery is not expected before 2010.

Forrester projected a basic 3% growth but said that after allowing for currency fluctuations, the global market for IT products and services would fall 3% to $1.66 trillion. The market grew by 8% in 2008.

The last time technology spending fell was in the aftermath of the bursting of the dotcom bubble, when it declined by 6% in both 2001 and 2002.

"For IT vendor strategists, the global IT market will be a gloomy one in 2009, with prospects of improvement in 2010. Unlike in past years, there are no significant growth markets to offset the weak ones," said Andrew Bartels, Forrester Research vice president and principal analyst.

Regionally, US purchases of IT goods and services will grow by 1.6% in 2009; while in Western and Central Europe growth will be 1.3%; Eastern Europe, the Middle East, and Africa are predicted to see a will see 5 percent growth. However, Forrester says when all of the regional numbers are equated to US dollars, there is a sharper slowdown in IT spending globally.

Forester expects a boost for some companies from the weaker euro in early 2009, including European vendors such as Alcatel-Lucent, Ericsson, SAP and Nokia Siemens. But it predicts this will prove

Forrester sees some sectors holding up better than others. "Software purchases will do a bit better than other categories, but all vendors will face a tough time until late 2009 or early 2010," said Bartels.

In 2009 software purchases are projected stand still at $388 billion, while the computer hardware market will fall 4% to $434 billion. The communications equipment market, including routers and switches is meanwhile projected to fall 3% to $353 billion in 2009.

A similar 3% fall is likely to occur in the IT services and outsourcing market, taking it to $484 billion.