Forrester slashes global IT outlook

Market research firm still predicts increased IT spending in 2008, but has dropped its U.S. growth projection to 2.8 percent and its global forecast to 6 percent

Forrester Research said Monday that it is downgrading its 2008 forecast for IT purchasing in both the United States and around the world.

The firm is still predicting increased IT spending, but has dropped its U.S. growth projection to 2.8 percent from 4.6 percent, and its global forecast to 6 percent from 9 percent.

Andrew Bartels, vice president at Forrester, said in a statement that the forecast is based on the assumption a mild recession will hit the U.S. economy in the second or third quarter.

"While it is by no means certain that the U.S. economy will in fact experience a recession, the risks of one are high enough to justify a more conservative outlook for the IT market." The sheer size of the U.S. market is enough to affect spending globally, he added.

Forrester is pegging the global market for IT spending in 2008 at $1.7 trillion, and said IT purchasing grew at 12 percent globally worldwide and 6.2 percent in the United States during 2007.

Region to region, the 2008 outlook varies, according to Forrester.

Growth in central and western Europe will stand at 5 percent this year, the company said. That is a substantial drop from 2007's 15 percent growth rate, but Forrester noted that the dollar's weakness against the euro helped drive that performance.

Meanwhile, Eastern Europe, the Middle East, and Africa are set for a strong year, according to Forrester. Oil-producing nations like Russia and Saudi Arabia will see 12 percent growth in 2008, just a slight drop from last year.

The Asia-Pacific region will also see strong growth at 9 percent, but that figure represents a drop from the 15 percent rate posted in 2007, Forrester said.

Meanwhile, the United States' overall share of global IT spending is still falling, dropping this year to 33 percent, Forrester said. That percentage stood at 40 percent in 2003, according to Forrester. The United States still has a healthy stake in software purchasing, however, with a 44 percent share of the worldwide market, the analyst firm said.

The picture is also mixed within various sectors, according to Forrester.

Software buying will grow 8 percent globally, down from 11 percent in 2007.

In contrast, hardware will be especially stunted. The firm predicts investment growth in communications equipment will fall to 3 percent from last year's 12 percent tally, and growth in IT spending on personal computers, servers, storage devices and peripheral markets will drop to 4 percent from 12 percent last year.

IT outsourcing will grow by 9 percent while consulting and integration services will see a slowdown, the firm predicted.

Forrester analyzed financial reports from 46 large IT vendors, as well as data from the Organisation for Economic Co-operation and Development, in preparing the forecasts.

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