Decline in IT spending to be worse than dot com burst

The recession has today claimed yet another victim with Gartner predicting that a sharp decline in the IT industry throughout the first quarter of 2009 will be even worse than 2001.

Richard Gordon, research vice president for global forecasting, said: "And you thought 2001 was bad? Such has been the speed and the severity of decline in 2009, it has been worse than when the internet bubble burst."

Figures released from Gartner forecast that worldwide IT spending will fall by 3.8 per cent in 2009 to $3.2 trillion (2.24 trillion), compared to nearly $3.4 trillion last year.

In Western Europe alone, almost $75 billion less is predicted to be spent compared to 2008.

Gartner said: "Although government stimulus packages will likely be important in the long term, they will not be able to offset this bleak near-term outlook. Until global financial markets stabilise, global GDP growth, including IT spending, is unlikely to strengthen."

Forecasts for all four of the key market sectors hardware, software, IT services and telecommunications are down on last year, with only software spending growth remaining positive.

Hardware was the worst hit with an estimated spending decline of 15 per cent this year. PC shipments are likely to contract by 9.2 per cent as people try to extend life cycles.

More positive aspects seemed to be "smaller but more strategic" improvements such as web conferencing or security, but these are relatively tiny spending areas and will not make a massive impact on the overall decline.

Although there will be steady decline throughout this year, single figure growth should return to the market by 2010 or 2011.

Jennifer Scott

Jennifer Scott is a former freelance journalist and currently political reporter for Sky News. She has a varied writing history, having started her career at Dennis Publishing, working in various roles across its business technology titles, including ITPro. Jennifer has specialised in a number of areas over the years and has produced a wealth of content for ITPro, focusing largely on data storage, networking, cloud computing, and telecommunications.

Most recently Jennifer has turned her skills to the political sphere and broadcast journalism, where she has worked for the BBC as a political reporter, before moving to Sky News.