Spending on consulting, systems integration and outsourcing is weaker than expected, according to IDC, which has been forced to downgrade its market growth predictions.
The research company lowered its forecasts for growth in the worldwide IT services industry as businesses have spent less than expected.
"The 2002 discrepancy is primarily the result of two market assumptions built into our forecast that did not hold true," explained Ned May, programme manager of IDC's Worldwide Services research.
"First, IDC expected enterprise spending in the first half of 2002 to be stable. However, spending on many IT services actually declined during this period.
"Second, the anticipated pick-up in demand by the middle of 2002 is not now expected until the last quarter of 2002, and a full recovery is not expected until the spring of 2003."
IDC originally predicted a 10.6 per cent growth rate for IT services, with spending in the first half of this year remaining stable.
But as spending on IT services actually declined in the first six months of 2002, IDC has reduced this prediction to 6.7 per cent, a 3.9 per cent reduction in growth for the year.
The company said that all geographic regions were hit by the downturn, but that the US and Canada were the worst affected. Least impacted were Japan, eastern Europe and Africa.
Project-oriented IT services, such as systems integration, IS consulting, and custom application development, were worst hit, and IDC said that it had reduced its 2002 growth rates by nearly five percentage points.
IDC's forecast growth rates for all outsourced IT services, ranging from outsourcing to application service providers, were also lowered in the midyear update.
But forecast growth for these markets remains a healthy 14.5 per cent for 2002, the company said.
Use the same password for every website? It might be time to change them all
Applicants for parking bay suspensions put at risk of credit card fraud by Islington Council
Robert Swan appointed interim CEO after Brian Krzanich's departure
Should you link your data sets to add value, or leave them separate to reduce risk?