Technology spending to shrink, says Forrester

IT budgets fall for the first time in seven years

Spending in the IT sector will shrink three per cent this year

The global economic crisis will reduce spending on IT products and services by three per cent in 2009, according to Forrester Research.

Recessions in the US and EU countries will be the main driver for slower spending, followed by currency fluctuations.

Technology spending last fell year-on-year in 2001 and 2002, after the dot com crash.

Forrester said that it expects a boost for some European companies from the weaker euro in early 2009, including vendors such as Alcatel-Lucent, Ericsson, SAP, Nokia and Siemens, but this is likely to be short-lived once the US dollar returns to a lower value against the euro.

While the market will be challenging for all technology spending in 2009, Forrester sees some sectors as more resilient 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 Forrester vice president Andrew Bartels.

2009 software purchases will be unchanged from 2008 at $388bn (£265bn), while the hardware market will fall four per cent to $434bn (£297bn) for products including personal computers, servers, peripherals and storage gear.

The communications equipment market, including routers, switches and teleconferencing systems, will fall three per cent to $353bn (£241bn) in 2009, said Forrester.

The IT services and outsourcing market will fall three per cent to $484bn (£331bn).

Forrester said that IT spending may recover to grow nine per cent in 2010 in dollar terms and six per cent in local currencies.