Tech Spending Growth To Slow in 2009: IDC

Worldwide technology spending will slow significantly in 2009 because of the financial turmoil that has rattled global markets since September, research firm IDC said Wednesday.

IDC now expects worldwide information technology spending to grow by 2.6 percent in 2009, down from its earlier forecast of 5.9 percent growth. In the U.S., spending is now expected to grow just 0.9 percent, well below IDC's August forecast of a 4.2 percent growth.

Photo: Daniel Feldt

There already have been clear signs that tech spending is weakening. Last week, Cisco Systems , the first of the major technology companies to report earnings that included October, warned that orders for its computer networking gear fell abruptly during the month. The tech bellwether expects sales to fall in the current quarter.

Despite the economic downturn, IDC continues to expect spending on technology products and services to continue to grow next year—just at a slower pace.

Information technology, said IDC chief research officer John Gantz in a statement, "is in a better position than ever to resist the downward pull of a slowing economy."

Gantz said technology is deeply embedded in businesses' important operations, and "remains critical to achieving further efficiency and productivity gains." Software and services, which companies can use to save money, will see solid growth while hardware spending, with the exception of data storage, is expected to decline in 2009.

Geographically, growth will be slowest in the U.S., Japan and Western Europe, where it will hover around 1 percent next year. Emerging markets in Central and Eastern Europe, Africa, Latin America and the Middle East will continue to see what IDC called "healthy growth," though at notably lower levels than its previous, double-digit forecast.

IDC expects technology spending to make a "full recovery," with growth rates approaching 6 percent in 2012. Even so, the research firm estimates that the industry will lose more than $300 billion in revenue due to slower spending over the next four years.

As grim as the picture looks, IDC analyst Stephen Minton said tech spending is actually faring better this time around than it did in the previous downturn, following the Sept. 11 attacks. The recession of 2001 and 2002 followed a tech bubble that was characterized by companies overspending on technology products.

This time around, however, there is no such bubble to burst. So while companies are scaling back technology spending as part of broader cutbacks in response to the recession, they still tend to see technology investments as an important part of their business, Minton said.

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