Technology-spending growth looks to slow

By Tom Stundza -- Purchasing, 12/12/2007 10:41:00 AM

Technology-spending will grow in 2008 but not at the rate of previous years, according to downwardly revised growth forecasts by such Research firms as IDC and Forrester Research. The firms blame subprime-mortgage fears, the turmoil in the U.S. financial sector and rising energy prices, among other factors, as reasons that chief information officers won't raise budgets much next year.

Much of the reduction in growth is due to a slowdown in the U.S., says Forrester Research, which now predicts U.S. tech-spending growth of 5.2% for 2008, down from a previous 2008 forecast of 6.4% and from the firm’s forecast of 5.7% for 2007. Research firm Gartner, meanwhile, says it expects 2008 U.S. tech-spending growth of 5.7%, down from the 6.1% it forecast this year. Tech-spending growth in other locales, particularly emerging markets such as India and China, is expected to be more robust.

The overall diminished forecasts come after a period of recovering global growth in technology spending. Following the dot-com bust in 2000, many companies curtailed spending on information technology. That led to declines in world-wide tech spending between 2001 and 2003, according to IDC. But in 2004, technology spending began to grow again, rising 4.7% that year, 6.9% in 2005, 6.1% in 2006 and an expected 6.9% this year, says IDC.