IDC: Worst may be over for IT cutbacks

A strong majority of companies surveyed for a recent IDC study expect to maintain or increase their IT spending in 2003, but those plans are tightly tied to worldwide economic stability, according to the research firm.

The survey covered around 1,000 chief information officers and chief executive officers in 12 countries throughout the U.S., Europe, and Asia/Pacific. Of those polled, 85 percent say they expect their IT budgets to either remain flat or grow in 2003 over last year.

But many organizations reported that they will revaluate their plans throughout the year and adjust spending in accordance with economic indicators and their confidence levels. Half of the CEOs polled cited low profits and a weak business climate as potential reasons to rein in IT spending, according to IDC.

In 2002, "wild card factors" such WorldCom's collapse and the possibility of a U.S. war against Iraq disrupted the IT market, said Stephen Minton, program director of IDC's worldwide IT markets practice. The outlook for 2003 remains shadowed by similar uncertainties, he said.

But organizations are hitting the limit on how long they can delay maintenance and upgrade spending. Cutbacks during the past two years have created a pent-up demand, according to Milton. IDC's study predicts that half of IT spending in 2003 will go toward routine infrastructure upgrades.

Vendors of storage hardware, PCs and network equipment are likely to see a sales surge because of demand for infrastructure equipment, IDC said in a summary of its study, titled "CEO Perspectives -- Global IT Spending Plans for 2003." But the benefits of that surge will be mixed, because price competition will continue to depress overall revenue in those sectors, IDC forecast.