IT spend sags as fears mount over US recession

Investment levels plummet, says research

The hardware sector will suffer with the slowdown

European IT investment will grow by just three per cent this year compared with the massive 15 per cent increase in 2007, according to research.

The fall is largely down to the dollar’s decrease in value against the euro, says analyst Forrester Research.

US technology spending, on the other hand, will miss growth expectations altogether, rising by just 2.8 per cent instead of the 4.6 per cent forecast.

“We are not sure whether the US economy will experience a recession, but it looks that way,” said Forrester vice president Andrew Bartels.

“And if that does happen, there will be a slowdown in IT spending worldwide.”

The hardware sector will be hit first. The impact on the software sector will take about six months longer to be felt. But services sales will be least affected, said Bartels.

“Although there will be a slight decrease in investment, it will not totally derail purchases and spending growth in technology,” he said.

Some big companies are making more significant IT investments to help weather any possible crisis.

Monarch Airlines, for example, has increased its yearly IT spend by 30 per cent, said chief information officer Richard Mintern.

“There are no plans to change that policy even with the possibility of recession,” he said.

“Reducing basic costs such as telecoms, and increasing investment in important areas such as security, has been a priority so that the business is in
good shape in case of a future downturn.”

Businesses will be reluctant to defer projects that will improve overall growth, such as investment in virtualisation and service-oriented architecture, said Charles Ward, chief operating officer of supplier group Intellect.