With global financial crisis, IDC slashes 2009 IT Spending Forecast

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New Delhi, Nov 16 (UNI) As the financial crisis is growing and consumers are spending less, the worst fears for the Indian IT and BPO industry are all set to come true with the Global IT research firm IDC drastically cutting its outlook for worldwide spending on information technology.

IDC has said worldwide IT spending in 2009 to grow only 2.6 per cent year-on-year (YoY) as compared to 5.9 per cent seen earlier.

The report also says the IT spending in the US will grow only at 0.9 per cent in 2009, lower than 4.2 per cent forecast in August.

On the other hand, the IT spending growth in Japan and Western Europe will also hover around one per cent in 2009, while that in Central/Eastern Europe, West Asia and Africa will grow less than double digits.

On a sector basis, software and services will enjoy solid growth while hardware spending, with the exception of storage, is expected to decline in 2009.

According to IDC, IT spending growth will recover to six per cent in 2012. Revenues of 300 billion dollars will also be lost between 2009-2012 due to slower spending, it said.

In light of the uncertainties associated with the ongoing financial crisis, IDC has also developed a downside scenario to help executives plan for a situation where the impact of the crisis is more pronounced.

In this scenario, IDC lowered the forecast for worldwide GDP growth in 2009 to 0.3 per cent, which is 1.5 per cent lower than the current forecast and worse than any year since World War II.

This produced a forecast of 0.1 per cent growth in worldwide IT spending in 2009 with negative growth in the United States, Western Europe, and Japan.

''Although the revised forecast and the downside scenario both reflect a grim outlook for global economic growth over the next several years, IT spending actually fares well when compared to the previous downturn after the events of September 11, 2001,'' said Stephen Minton, vice president, Worldwide IT Markets and Strategies at IDC.

Companies currently don't have the asset and spending 'overhang' that enabled them to put off purchases after Y2K and the dot-com bubble. As a result, there will be greater pressure for them to continue making IT investments in order to stay competitive, he said.

While these numbers seem fairly glum, IDC said it believes the IT industry is more resistant to market changes than it was just a few years ago. The fact that there is some growth in the forecast shows how important IT has become to nearly every business.

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