IT market to rebound

A survey from IDC suggests that the good times maybe about to return to the IT sector. The research firm says that 85% of companies will maintain or increase their IT spending levels this year.

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By  Neil Denslow Published  February 27, 2003

A survey from IDC suggests that the good times maybe about to return to the IT sector. The research firm says that 85% of companies will maintain or increase their IT spending levels this year. However, economic stability and corporate profits remain key to the IT market rebound.

IDC’s study, which was based on a survey of nearly 1000 CEOs and CIOs in 12 countries, indicates that many organisation will be constantly re-evaluating their IT spending plans throughout the year. Any improvement in business confidence will then be translated into a solid recovery for IT suppliers.

"IT suppliers should monitor economic and business confidence indicators for the early warning signs that IT spending will either exceed or be lower than current projections," comments Stephen Minton, program director at IDC Worldwide IT Markets. "Just as IT spending was severely disrupted in 2002 by wild card factors including WorldCom and Iraq, so it is that the outlook for 2003 remains clouded by similar uncertainty."

IDC also says that CEOs are more confident about IT spending levels than their CIOs. The IT department believes that competitive pressures and changing business needs will be the triggers for budget increases, whereas the CEOs remain focused on the bottom line and the wider economic outlook. Almost 50% of all CEOs cited slim profits and a poor business climate as potential reasons to delay IT spending this year.

"Routine infrastructure upgrades will dominate short term budget priorities, taking up almost half of all spending in 2003," says Minton. "This isn't surprising, given that a lot of companies have spent very little during the past two years on the technology which is already core to running their business."

This pent-up demand is likely to have a positive impact on the sales of storage hardware, PCs and network equipment. However, IDC warns that price competition will continue to depress overall revenues in these sectors.

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