Forrester warns of longer downturn in IT spending


Forrester warns of longer downturn in IT spending

Microscope contributor

The IT market is set for several quarters of declining revenue as a result of the global recession rather than just a sticky end to the year and the start of 2009.

The warning that the impact of recession is going to be more long term on the IT sector has been made by Forrester, which has changed its forecasts based on what has happened in the last couple of weeks.

In the report: What the financial crisis means to the tech market, analyst Andrew Bartels outlines a tough short-term future for the industry.

“With the financial crisis now spreading around the world, risks have grown that the US and other major countries will experience a longer and deeper recession than we had expected. If so, the tech market would see several quarters of declines in purchases, not just two or three quarters with little or no growth in late 2008 and the first half of 2009,” his report stated.

The expectation had been of growth rates of around 5% and 6% for this year and next in the US tech sector but those rates are dipping to around.

But on the positive side Bartels said that the intervention from global leaders had made an impact.

“While the risk of a protracted global financial meltdown is increasing, we believe that intervention by the governments and central banks of major economies will keep that from happening,” the report added.

On the vendor side Forrester expects Q4 to be a rough time for most players with software and IT services areas that will start to suffer.

The report voices the concerns that many are having in the UK with fears of a recession growing.

But although the channel has reported some delays in orders and expressed frustration with the slow flow of credit there is still a decent level of business being processed.

Ian Kilpatrick, chairman of Wick Hill, said the impact of recession depended on where you were geographically.

“We operate in three spheres, the US, UK and Germany. In the US the tech sector has been sliding into recession for a while and is hurting, in the UK we are expecting problems that have been exported from America provoking the credit crunch and a dive into recession, but in Germany the country has come out of recession and business is booming,” he said.

“Here there are going to be winners and losers. Saying that everyone is going to get a recession is overstating it,” he add

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