IT and telecoms spending on the up

After two years of record declines and recession, the IT and telecoms industries have gradually returned to positive growth in 2003 and continued recovery is expected next year, according to industry analysts.

IDC's latest Worldwide Black Book for the third quarter of 2003 states that global IT spending is set for five per cent growth to $916bn in 2004, while spending on telecoms services will show four per cent growth to $1tn.

"Our forecasts are based on a relatively conservative set of economic assumptions," stated Stephen Minton, IT spending analyst at IDC.

"If the recent announcement of surging economic growth in the US is sustained, and the gradual improvement in international economies continues, we can look forward to a further up-tick in IT spending expectations."

IDC's research, which gathered IT spending data from 55 countries, reported that total spending in 2003 will show a return to positive growth in the US and emerging markets, although worldwide growth will remain inhibited by declines in Europe, Japan and Canada.

While hardware revenues have been depressed by what the analyst describes as "fierce price competition in spite of shipment growth", the gradual recovery in software and services spending is expected to gather steam during 2004 as business confidence improves.

"The recent economic improvements will undoubtedly be good for many IT vendors, although growth will not return to dotcom heights," said Minton.

"Pent-up demand within IT departments, particularly for mission critical infrastructure, has reached unprecedented levels."

IDC's research shows that data services growth will reach 16 per cent in 2004, while spending on equipment will show a long awaited recovery to five per cent growth in 2004 and six per cent in 2005.

"The telecoms industry will finally return to increased equipment spending in 2004," said Ludovica Bruno, a telecoms analyst at IDC.

"As the telecoms winter gives way to spring, the rebound will average nearly five per cent growth between now and 2007."