IT Spending Seen on the Rise Again in 2010

After a sharp slump, IT spending could be poised for a recovery this year. First Forrester Research and now Gartner have issues their IT projections for 2010, forecasting that the increase will effectively offset last year’s decline. The gain would restore spending to 2008 levels.

At the same time, the weakened U.S. dollar is expected to account for a large portion of the growth, which would stimulate demand in the overseas markets. But the recovery won’t be even across IT segment or market. CIO Update takes a look at the numbers.

Gartner today issued a report that projects worldwide IT spending will grow 4.6% this year, effectively erasing the 4.6% decline of 2009. However, that’s still progress considering Gartner was projecting that spending would not return to 2008 levels until 2011.

The IT research firm said that spending in five major areas of IT—hardware, software, IT services, telecom and telecom services—will reach a combined total of $3.36 trillion this year, up from $3.21 trillion in 2009. Another market research firm, Forrester, made a similar prediction for a 2010 rebound.

“Last quarter, we did not expect to see IT spending levels recover to 2008 levels until 2011. However, with the upward revision to the current dollar forecast, we are projecting that global IT spending this year will approach the level seen in 2008,” said Richard Gordon, research vice president at Gartner in a statement.

“Our updated forecast for IT spending to reach $3.4 trillion in 2010 is actually a year earlier than we expected to level our previous forecast update, reflecting a bounce back in underlying IT spending from the sharp drop in 2009,” he added.

However, Gordon warned that much of the increase in the revised forecast is due to the depreciation of the U.S. dollar compared with last year. A falling dollar makes U.S. products, like IBM hardware and Microsoft software, cheaper to overseas markets, enticing them to order more American goods. But Gordon had some positive indicators as well, citing a rise in GDP, improving consumer confidence, increased availability of credit and companies finally spending due to “pent-up demand for new technologies.”

Read the full story at CIO Update:

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