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Forrester revises estimates for 2008 IT expenditure
By siliconindia
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Friday, 11 January 2008, 22:00 IST
Bangalore: Forrester Research, a U.S. based independent technology and market research company, in its latest report has said that it is revising its forecast for 2008 IT spending from 6.4 percent to 5.2 percent while its forecast for IT equipment (including capital purchases) spending is down from 7.8 percent to a growth of 4.8 percent. The IT expenditure includes operational budgets for equipment, IT consulting, outsourcing services and IT salaries.
The report, U.S. IT Market Outlook, prepared by Andrew Bartels of Forrester, states that within the IT spending category, IT consulting and integration services would be slow, growing at three percent, compared with an earlier estimate of 9.4 percent. Meanwhile, IT outsourcing and IT salary amd benefits will remain stable, compared to estimates again, at 5.8 percent and 5.7 percent, respectively.
For top Indian vendors, the major part of the revenue depends on outsourcing services than consulting or integration. IT outsourcing has gradually shifted from large deals to smaller and more focused deals, a move that has slowed revenue growth. The number of deals has also lowered. The growing presence of Indian vendors such as Infosys, TCS and Wipro and a build up by the U.S. and European IT vendors of their own offshore resources have driven price points down, resulting in the limited growth in outsource revenues.
Software investments have had a less impact and with 2008, growth estimates have been revised from 9.6 percent to a "still strong" 8.1 percent. This is an increase from seven percent in 2007. Service oriented architecture has continued to be the main catalyst for new investment in software, both for infrastructure and for applications.
Overall, IT spending would grow slower at 5.2 percent in 2008, compared with 5.7 percent growth in 2007 versus a 5.4 percent growth in 2006.
The revisions were due to two reasons - one, bigger and longer-lasting impacts from the bursting of the housing bubble; and two, the ratcheting downward of 2008 forecasts by economists at the Federal Reserve, OECD as well as by those of the National Association for Business Economists.