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European Debt Crisis to Hit Global IT Spending

SI Team
Tuesday, August 3, 2010
SI Team
In the wake of currency fluctuations resulting from the current European debt crisis, Gartner has moved to drop its global IT spending forecast for 2010. Global IT spending has increased to 3.9 percent over that of 2009, down from an initial projection of 5.3 percent growth. This effectively pegs global spending on IT at $3.35 trillion, over last year’s total IT spending of $3.225 trillion.

In developing the revised figures for IT spending, Gartner recognized that the global economic outlook appears stable but still vulnerable to ‘shocks’ in key regions and industries. Given this uncertainty, the research firm expects IT buyers to especially focus on value in making purchase decisions.

In the words of Richard Gordon, Research Vice President, Gartner, “The US dollar has strengthened against the Euro during the second quarter of 2010 and this trend will likely to continue in the second half of 2010, which will put downward pressure on the US dollar-denominated IT spending growth.”

As governments struggle to bring budget deficits under control during the next five years and to reduce debt during the next 10 years, longer term, public sector investment will be curtailed in Europe. Due to the direct impact of austerity measures on the key government suppliers, private sector economic activity is also expected to be hindered. The research firm warns that an effective policy response is critical to stimulate investment in general and in IT in particular.

At the same time, computing hardware spending across the globe is forecast to reach $363 billion in 2010, up 9.1 percent from 2009 spending. The research firm expects PC shipments to remain robust throughout 2010 and 2011. “The computing hardware sector continues to benefit from a healthy PC sector, which accounts for two thirds of the total spending in this area,” says Gordon.

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