IT shows signs of return to growth

The US and UK IT markets are showing signs of a return to spending growth, according to a report from market analysts the Aberdeen Group.

‘The US market was the first to slow down and is now the first to return to growth, but the UK, France and Italy are set to grow levels of IT spending from the second quarter this year,’ said Hugh Bishop, Aberdeen Group’s senior VP and author of the report.

According to the report, worldwide IT spending in 2001 grew at a meagre 0.2%, while declining 0.4% in the US. But this year world IT spending will grow at 3.1%, led by the return to spending in the US. The US alone accounts for 37.5% of world IT spending, and according to the report, it will increase spending by 4.3% this year over 2001.

But the return to growth will not be even across geographies or market sectors. Aberdeen expects Germany and Japan to lag behind with IT spending remaining flat this year. Spending on hardware as a percentage of the total is expected to fall as software and services grow in importance.

The return to spending should see global spending on IT reach £1 trillion by 2005 – up 15% on last year.

But the days of double-digit growth in IT investment has passed forever. ‘IT spending will no longer be a tide that lifts all boats,’ said Bishop. ‘As a result, suppliers and market segments exhibiting hyper-growth will most likely do so at the expense of others.’ Key IT projects requiring the bulk of the spending over the next few years will be customer service and support systems as well as security, storage and web management enhancements, Bishop said. The suggested IT spend results demonstrate how confidence in the economy is re-emerging. Spend will include that of European financial service companies such as Abbey National, HSBC, Lloyds TSB, Standard Life and Woolwich, which are expected to spend £46bn on banking technology by 2004, integrating legacy infrastructure with internet and wireless operations.

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