US IT spending to decline this year

Past predictions of growth reversed, according to research

Fewer dollars are being spent on IT

US IT spending is expected to fall by 3.1 per cent this year, according to Forrester Research, with the analyst downgrading its previous prediction of 1.6 per cent growth in the light of the rate of decline in US GDP.

As the world’s biggest market for technology and services, a fall in US IT investment is bound to have a major knock-on effect on UK IT buyers and in particular on their suppliers.

Forrester says that computer hardware spending in the US will fall by 6.8 per cent this year, after a drop of four per cent last year. Software purchasing will decline slightly – although the software sector is protected to a degree through annual licensing and maintenance revenue, says the analyst.

But Forrester predicts a slight increase in IT outsourcing sales, up 2.1 per cent.

"In many ways, the biggest factor affecting the tech market is not the recession but the breakdown of the financial system," said Andrew Bartels, Forrester Research vice president and principal analyst.

"The credit crunch is still causing companies to dramatically cut back on all forms of capital investment, including many IT goods and services, and this will affect 2009 revenues for most IT vendors."

But Bartels remains optimistic for the longer-term prospects for the sector.

"Growth will come back strong once the recession and tight credit conditions start to ease, so IT vendor strategy professionals should get prepared by investing in research and development and focusing on building the proof points, case studies, and success stories about how their technology solutions have helped businesses," he said.