TechnologyAccounting SoftwareAccounting scandals hamper IT spending

Accounting scandals hamper IT spending

Growth in IT spending will pick up over the next couple of years, but the recovery will be steady at best until 2004, as accounting scandals had weakened markets and worsened the situation.

Link: IDC predicts better times for the IT industry

According to analyst IDC, IT spending in Western Europe will grow by 4.4% in 2002 compared to 3.4% in 2001.

This figure will rise to 6.2% in 2003 but the kind of healthy levels of growth seen in 2000 is not expected until 2004.

‘With the first half of 2002 complete and no significant improvement in business conditions apparent, the chances of a near-term rebound in IT spending in Western Europe are slim,’ warned Vicky Hawksworth, senior analyst at IDC.

She added that US accounting scandals weakening markets had made the situation worse.

IDC said the Western European IT market has suffered a number of major setbacks over the past two years; first came the dot com crash and subsequent repercussions, followed shortly after by the telecommunications slump and knock-on effect on the hardware market. Adding to these woes, the global economy then encountered a significant slowdown.

The firm said that taking these factors into consideration, the Western European IT market has proved relatively resilient and with the exception of the hardware market, all major segments have continued to grow.

‘A return to healthy IT investment will be hindered until business profitability ameliorates and the restrictions on corporate IT budgets are subsequently relaxed,’ said Hawksworth.

‘This will be a gradual process and may take up six months to materialise; hence overall market conditions in Western Europe are not likely to start to improve noticeably before the first half of 2003.’

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