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IT spending to rebound in 2010: Gartner

Wednesday, October 21, 2009 (14:12:04) Tags: India, busines, IT, industry Bangalore: The global IT industry will return to growth in 2010, with technology spending increasing 3.3 percent ($3.3 trillion) after declining by 5.2 percent in 2009, IT research and advisory firm Gartner has said. "The IT industry is exiting its worst year ever with 5.2 percent decline in technology spending worldwide. IT spending by enterprises is projected to drop 6.9 percent over 2008," Gartner said in its latest outlook for the high-tech industry. Cautioning the IT industry against being overly optimistic, an expert from the advisory firm said though growth would return next year, it would not be as high as it was in 2008 in revenue terms. "In growth terms, the IT budget will be zero percent or less for over 50 percent of the industry next year, but will slowly improve in 2011. The industry will face cost, risk and growth challenges in 2010," Gartner's research global head Peter Sondergaard said at the ongoing "ITxpo" event at Orlando in the US. Spending on IT services worldwide is forecast to grow 4.5 percent in 2010 from the projected $781 billion by this year-end. Similarly, global telecom spending will grow 3.2 percent next year from a projected decline of 4 percent to $1.9 trillion in 2009. "But hardware spending will be flat in 2010, as the global computing market sales are set to plunge by 16.5 percent to $317 billion by this year-end. Spending on software, however, is projected to grow 4.8 percent in 2010 from a decline of 2.1 percent this year," Sondergaard said. Emerging regions such as Asia-Pacific, South America, north Africa and the Middle East will see strong growth. "The Silicon Valley in the US will not be in the driver's seat anymore," Sondergaard asserted. According to Gartner, the global IT industry will see a shift to operational expenditure (opex) from capital expenditure (capex). With delayed purchases of servers, personal computers and printers continuing in 2010, the IT industry must assess the impact of increased equipment failure rates and whether current financial write-off periods are suitable. Replacement of about one million servers, accounting for three percent of the global installed base, has been delayed by a year. The number will be two million in 2010. "If replacement cycles do not change, about 10 percent of the server installed base will be beyond the upgrading schedule, impacting the enterprise risk," Sondergaard observed. Noting that the industry has to build compelling business cases for every investment decision, the research head said CIOs could no longer look at IT as a percentage of revenue, but benchmark technology use according to business impact. In 2010, users will invest more in business intelligence to move from "in here" to "out there". Similarly, enterprises will invest more in shared infrastructure than in server and data centre environment. "Social media will be another vertical where investments will take place in 2010, as organisations will see more netizens getting on board due to demographic dividends," Sondergaard added. (IANS)