IDC: Worldwide IT Spending to Grow 3 percent in 2010

IDC: Worldwide IT Spending to Grow 3 percent in 2010

Worldwide spending on information technologies will continue to feel the effects of the global recession throughout 2010. According to a new forecast from IDC, worldwide IT spending will increase by just 3 percent in 2010 at constant currency.

"Despite pent-up demand for upgrades and new applications following the deep spending cuts of the past year, economic uncertainty will combine with capital and credit constraints to inhibit spending in mature economies," said Stephen Minton, Vice President of Worldwide IT Markets and Strategies at IDC. "The engine of global industry growth in 2010 will be in emerging markets, in particular China and India, where IT spending will recover much more quickly."

Overall, IDC forecasts that worldwide IT spending will reach $1.48 trillion in 2010, still below the $1.5 trillion recorded in 2008. "Following a decline in overall tech spending of 4.5 percent at constant currency in 2009, IT spending will not fully recover from the global recession until sometime in 2011," Minton noted.

IDC's forecast of 3 percent growth in worldwide IT spending is at constant currency, and does not assume future fluctuations in the value of the US dollar or other international currencies over the next 12 months. If the US dollar weakens in 2010, the actual recorded growth of IT spending in US$ may be significantly higher. Measured in US dollars, worldwide IT spending declined by 8 percent in 2009 due to the stronger value of the dollar compared to 2008.

On a global basis, IDC expects hardware spending to grow by 5 percent in 2010, while software spending and IT services spending will grow by 2 percent and 3 percent, respectively, in constant currency. In the hardware segment, worldwide PC spending is forecast to increase by 3 percent this year, up from the previous forecast of 2 percent growth, while the forecast for servers, storage, hardcopy peripherals, and network equipment have also been raised. The outlook for software and services spending reflects the lower value of contracts signed in the past year and continued caution toward new project-based spending in mature economies.

Regional highlights from IDC's new forecast include the following:

* Asia/Pacific: Overall, the region will experience 6 percent growth in IT spending in constant currency, following a 1 percent decline in 2009. However, China and India are both expected to experience double-digit growth (11.5 percent and 13.5 percent, respectively) this year. Hardware spending will experience solid gains this year, driven by pent-up demand and new infrastructure deployment. Following a decline of 8 percent last year, no IT spending growth is forecast for Japan this year.

* EMEA: Following a worst-ever decline of 7 percent in 2009 at constant currency, IT spending in Western Europe is forecast to be effectively flat in 2010. A few market segments are expected to return to positive growth, but the market sentiment across the region remains weak. In Central and Eastern Europe, the 20 percent spending crash of 2009 will be followed by 9 percent growth in 2010. IT spending in the Middle East and Africa will also return to growth this year (12 percent at constant currency) after a 2.5 percent decline last year.

* Latin America: IT spending in Latin America will be up by 5 percent this year. Overall spending will gradually accelerate in line with the recovery in business and consumer confidence. Increasing market maturity in some sectors will contribute to price competition as some buyers gravitate towards low-cost solutions. The key market of Brazil will return to a more robust level of growth by 2011.

* North America: The gradual economic recovery will enable many US organizations to relieve some of the pent-up demand for system and network upgrades following last year's spending cuts. But spending will continue to be cautious and, in contrast to the emerging markets, the SMB sector will struggle to fund new IT initiatives. In Canada, a subdued market is forecast to produce a decline of 1 percent in IT spending this year.

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