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Wall Street Crisis Not Deterring IT Spending Forecasts

Gartner's August spending growth prediction stands at an 8% increase over last year, though the future is a bit hazier in light of the latest Wall Street bombshells.
Gartner on Thursday said it wasn't ready to revise its IT spending forecast for this year, despite the current U.S. financial crisis.

In an e-mail to InformationWeek, the research firm said it would stick to its prediction released in mid-August. Gartner is forecasting an 8% increase in worldwide IT spending from last year to more than $3.4 trillion. Much of the growth is based on the decline of the U.S. dollar. When viewed in terms of constant currency, IT spending growth is expected to rise by about 4.5%, Gartner said.

"The U.S.-led economic downturn shows no sign of causing a recession in IT spending," Gartner analyst Jim Tully said at the time the forecast was released. "In subsequent years we will see reduced growth, but the fundamentals remain strong. Emerging regions, replacement of obsolete systems and some technology shifts are driving growth."

Forrester Research this week lowered its U.S. IT spending forecast for next year, while increasing its prediction for the current year. Tech spending this year would grow to $572 billion, up 5.4% from last year. That's higher than Forrester's previous forecast of a 3.4% increase. Forrester's estimates typically differ from Gartner's because the two analyst firms base their estimates on different criteria.

For next year, Forrester revised its prediction downward to an increase of 6.1% versus its original forecast of 9.4%. Forrester now expects IT spending in 2009 to reach $606 billion.

Forrester had been working on its revised forecast before the latest Wall Street bombshells, such as the U.S government's $85 billion bailout of the world's biggest insurer, American International Group. The analyst firm, however, decided to move up the release of its revised forecast in part because of the bankruptcy-court filing by investment firm Lehman Brothers, the shotgun sale of Merrill Lynch to Bank of America, and the resulting 504-point nosedive on the Dow Jones industrial market.