April 9, 2010

US Information Technology Spending On The Rise

With U.S. spending now expected to grow faster than previously thought, a new report on information technology has provided more evidence that an industry recovery is on its way.

Forrester Research expects information-technology spending in the U.S. to grow 8.4 percent this year, to $500 billion.  That is up from its January forecast of 6.6 percent.

Higher spending on communications equipment has helped better the outlook, accompanied by ongoing rebound in computer and software purchases.

Meanwhile, the worldwide tech market is expected to grow 7.7 percent to nearly $1.6 trillion.  This is lower than Forrester's previous estimates of an 8.1 percent growth.  Forrester analyst Andrew Bartels told the Associated Press (AP) this is because the Greek financial crisis weakened the euro and strengthened the U.S. dollar.

According to Forrester, technology spending looks to have hit bottom in the third quarter of 2009 and started to turn around late in the year.

Bartels said in Thursday's report that technology spending in the fourth quarter was "generally level with or slightly higher than the same period in 2008 "” clear evidence that the downturn is over and that renewed growth has started."

Forrester predicts that spending on computer equipment and software will be strong this year, with percentage growth in the double digits for both sectors.  Many businesses had put off replacements and upgrades during the economic downturn.

Information-technology consulting services and communications equipment are expected to both grow about 7 percent.  IT outsourcing will have slower growth at just less than 4 percent, though it was the only sector to grow last year.

A recent earnings report from Oracle Corp., a business software company, has confirmed Forrester's forecast.  The company posted a 17 percent revenue increase for the fiscal third quarter that ended in February.  This is a sign that large companies are steadily boosting their technology spending.


On the Net: