A stalling economic recovery has IT executives feeling cautious on hiring and tech spending initiatives.
In light of modestly improving conditions in
the U.S. economy, IT spending growth remains subdued, although nearly
two-thirds of respondents said they are increasing their IT operational
spending this year, according to a survey of more than 200 IT executives
conducted in the first half of 2012 by research firm Computer Economics.
However, a quarter of respondents said they would actually be decreasing
overall IT spending, while 13 percent said spending would remain about the
same.
The hiring outlook was also a mixed bag, with
40 percent of IT organizations planning to increase headcount, compared with
only 33 percent in 2011. However, 27 percent of respondents said they plan to
reduce staff this year, while 33 percent expect no change. As with capital
spending and operational spending, there appears to be a rising disparity among
organizations, the report said. Some are prospering while others are still
pulling back.
When asked about their expectations for
change in IT operational spending, nearly one-third (31 percent) said they
expect budget cuts in the year ahead, compared with only 16 percent who expect
a green light to exceed their spending plans. Survey results indicated the mood
of IT executives is getting more pessimistic, even though IT budgets are
increasing modestly; the lack of confidence is higher today than it has been at
any time since 2009, when nearly half of IT organizations anticipated budget
cuts amid the deepening financial crisis.
Nearly half of IT executives find their
budgets are inadequate to meet the needs of the business. The meager growth in
IT spending has not restored IT budgets, and many IT organizations remain
underfunded due to cost cutting. We believe this is unsustainable and,
therefore, a potentially bullish indicator for IT spending in the years ahead,
the report noted. Business leaders are not aggressively making strategic
investments in innovative technologies to gain competitive advantage, at least
to the degree that IT spending would rise faster than revenue. Nor are
businesses struggling with deteriorating revenue, which can also cause this
metric to rise temporarily, as it did in 2010.
The picture gets even worse when considering
the outlook for IT capital spending, with 29 percent expecting to spend less
than previously planned. Just 15 percent of respondents are planning on
spending more, while 55 percent said spending would remain about the same,
suggesting IT executives are cautious and prepared to resume cutting costs as
the economic recovery stumbles slowly forward. Upgrading existing systems was
the top priority for IT executives, followed by increasing business efficiency
and developing new systems, suggesting organizations are placing greater
emphasis on squeezing cost out of the IT infrastructure this year.
Nathan Eddy is Associate Editor, Midmarket, at eWEEK.com. Before joining eWEEK.com, Nate was a writer with ChannelWeb and he served as an editor at FierceMarkets. He is a graduate of the Medill School of Journalism at Northwestern University.
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