Gartner cuts forecast, tips ICT sector to shrink 6%

IT research firm Gartner has cut its forecast, tipping IT and telecom spending to fall 6% this year thanks to the weak economic conditions and currency fluctuations.

Total spending on telecom and IT hardware, software and services will fall to $3.2 trillion, down from $3.4 trillion last yea, Gartner said Tuesday.

Earlier this year Gartner had projected a 3.8% decline in spending.

Richard Gordon, research vice president and head of global forecasting, said the full impact of the recession on telecom and IT services was “still emerging”.

The decline in hardware and software spending had “almost stabilized, and only minor downward revisions” were required to forecasts this quarter, he said.

“However, the full impact of the global recession on the IT services and telecommunications sectors is still emerging, and forecast growth in these areas has been further reduced significantly.

The rise in the value of the US dollar against most major currencies in recent months would also constrain IT spending growth this year.

“While the global economic downturn shows signs of easing, this year IT budgets are still being cut and consumers will need a lot more persuading before they can feel confident enough to loosen their purse strings,” Gordon added.

All four major segments — hardware, software, IT services and telecom — will experience declining revenue, something that did not happen in the 2001 downturn, Gartner noted.

The computing hardware segment would see the steepest decline, with spending projected to shrink 16.3%. The software segment will hold up the best, with spending forecast to drop 1.6%