IDC Slashes 2009 IT Spending Forecast, Citing Financial Crisis, Consumer Spending

Research company IDC cuts its IT spending forecast for 2009 as the financial crisis continues to grow and consumers spend less on technology and other goods and services. In the United States, IDC predicts that IT spending will increase less than 1 percent in 2009, while the rest of the world watches IT spending grow less than 3 percent. Hewlett-Packard and Dell will deliver new financial results later in November, which should give a more in-depth picture of the impact of the financial crisis on tech companies.

As the financial crisis grows and consumers spend less as the holiday shopping season approaches, IDC has slashed its IT spending forecast for 2009, with the United States, Western Europe and Japan taking the biggest hit.

In a report released Nov. 12, IDC predicts that worldwide spending on IT hardware, software and services will grow only 2.6 percent year-over-year in 2009. The research company originally predicted IT spending would grow 5.9 percent in the same period.

The IDC report also predicted that IT spending in the United States, Western Europe and Japan will grow less than 1 percent in 2009 as these three major economic regions sort out the implications of the financial crisis on Wall Street and in other stock markets. In the United States, IDC predicted that IT spending will only grow 0.9 percent, which is much lower than the 4.2 percent growth IDC called for in August.

While these numbers seem fairly glum, IDC said it believes the IT industry is more resistant to market changes than it was just a few years ago. The fact that there is some growth in the forecast shows how important IT has become to nearly every business.

"Technology is already deeply embedded in many mission-critical operations and remains critical to achieving further efficiency and productivity gains," John Gantz, an IDC analyst, wrote in the report. "As a result, IDC expects worldwide IT spending will continue to grow in 2009, albeit at a slower pace."

Still, IDC is predicting that IT spending will not return to a 6 percent growth period until 2012, and in the next three years, more than $300 billion in IT industry revenues will be lost.

IDC is not alone in reducing its IT spending numbers. In September, Gartner and Forrester Research produced new reports that showed IT spending slumping as the financial crisis continues. Both Gartner and Forrester reduced their IT growth forecasts to about 2 percent in 2009.

The IT industry should have a clearer indication of the impact of the financial crisis when two bellwethers report financial earnings later in November: Dell is slated to release new quarterly numbers Nov. 20 and Hewlett-Packard reports its numbers Nov. 24.

Dell has already signaled that the worldwide economy has begun to make the company look at additional costs savings. On Nov. 3, CEO Michael Dell wrote an internal company blog post that asked employees to take an unpaid vacation. In addition, he wrote that he would seek additional cost savings by reducing the number of outside companies Dell uses for various projects.