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Government IT Spending Poised For Growth

Recent increase in information technology expenditures portends an uptick, led by local governments, reports CDW IT Monitor.

Elizabeth Montalbano

November 12, 2010

2 Min Read

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IT spending in the government sector is poised for an uptick, with investment expectations among decision makers at their highest since August 2008, according to a monthly survey that tracks IT spending.

In October, IT spending expectations for the government sector increased six points from September, to 69, the highest level in more than two years, according to the CDW IT Monitor.

The trend shown by these results is good news for technology vendors, which rely on the government sector for growth and have seen earnings flag because of squeezed IT budgets. Earlier this week, Cisco Systems blamed lackluster earnings results on, among other things, a 48% drop in state government orders in the third quarter.

The CDW IT Monitor has been tracking monthly IT spending since the beginning of the U.S. economic recession in 2007. In fact, the percentage of government decisions makers who say they will invest in new software is the highest figure since the Monitor launched in December of that year.

Though government IT budgets are still tight, state and local officials in particular are "prepared to spend money to save money in the long run," CDW COO Thomas E. Richards said in a press statement.

The possibility of imminent hardware purchases also looks promising, according to the survey, with 84 percent of local governments planning to replace or install hardware in the next six months.

Indeed, it's local governments above all segments that likely will lead the sector out of its spending slump, according to CDW, which said confidence there seems to be the strongest for growth.

In addition to eyeing hardware purchases, 85 percent of local governments also plan to replace or install software in the next six months, a figure that represents a 10-percentage-point jump since August, according to the survey.

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