Tech spend forecast cut in 'Age of Austerity'

Europe's sovereign debt crisis is impacting IT spending plans

Growth in IT spending for the year will be slower than previously expected, according to industry analyst Gartner.

The firm has revised its previous estimate for spending growth in 2010, shaving the rate of increase to just 3.9 per cent down from the 5.3 per cent growth estimate given at the start of the year. This, it said, was the result of financial pressures across a range of sectors and the weakness of local currencies.

"The European sovereign debt crisis is having an impact on the outlook for IT spending," said Richard Gordon, research vice president at Gartner.

"The US dollar has strengthened against the euro during the second quarter of 2010, and this trend will likely continue in the second half of 2010."

As currencies continue to stutter, so too will public spending, said Gordon, who explained that governments would look to reduce debt over the next decade.

The withdrawal of funds here will create a ripple effect across the economy, he added, explaining that as governments choose not to spend, so too will other organisations.

"Private-sector economic activity will also likely be hindered because of the direct impact of austerity measures on key government suppliers and the indirect impact caused by the 'ripple effect'. An effective policy response will be critical to stimulate investment in general and in IT in particular," Gordon added.

Hardware spending will increase by just over nine per cent despite the economic situation, according to Gartner, and sales of PCs in particular will continue to rise.

"The computing hardware sector continues to benefit from a healthy PC sector, which accounts for two-thirds of total spending in this area, and we expect PC shipments to remain robust throughout 2010 and 2011," Gordon said, explaining that many firms would look to update their operating systems or replace hardware.

"Consumer shipments will continue to be powered by strong mobile PC uptake, while professional shipments will be buoyed by a new replacement cycle and migration to Windows 7."