Caution in Europe cuts back global IT spending

Global spending on information technology (IT) will rise at the slowest pace in three years in 2012 as Europeans, worried about the region's sovereign debt crisis, are cutting back on investments, research firms said on Thursday. "When we look at the Eurozone, the scenarios range from bad to very bad to catastrophic," Richard Gordon, research vice-president at Gartner, told Reuters on Thursday. "We've taken the bad scenario, but things could turn much worse. At the moment we assume it will muddle through and find some kind of solution," he said. Gartner predicted global IT spending, a bellwether of firms' willingness to invest, would rise 3.7 per cent in 2012, down from its earlier estimate of 4.6 per cent growth. The forecast for western Europe was slashed to a 0.7 per cent drop in spending from a previously expected rise of 3.4 per cent. "The main reason is ongoing uncertainty around the Eurozone: this is going to impact business and private confidence," Gordon said. Governments' austerity measures were likely to weigh on public IT spending, while the woes of financial services industry would likely weigh on investments there, he added. At the same time, technology research firm Forrester lowered its forecast for 2012 growth on the global IT market, excluding communications services, to 5.4 per cent from its September forecast of 5.5 per cent. Modest Forrester estimated the market grew last year 9.6 per cent when measured in US dollars. "We are assuming that the European economies will go into a recession, but we are assuming it will be a fairly modest recession based on the austerity programs hitting so many countries," said Forrester analyst Andrew Bartels, adding the breakup of Eurozone would make outlook a lot worse. Buyers, especially in the United States, will continue to invest in a new generation of technology that combines mobility, cloud, and analytics, even though they are facing economic uncertainty, Forrester's Bartels said. Gartner's Gordon said there was still quite strong growth in emerging markets and predicted more resilient sectors, like software sales and telecom gear, would drive worldwide growth.