IT spending increase

The worldwide IT spending will increase by 6.3% in 2006, as economic stability in the US, Europe, and Japan combines with continued robust growth in emerging markets, according to IDC.

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By  Angela Sutherland Published  March 28, 2006

The worldwide IT spending will increase by 6.3% in 2006, as economic stability in the US, Europe, and Japan combines with continued robust growth in emerging markets, according to IDC. Growth will be strongest in the software market at 7%, while hardware and services are both expected to post overall growth of 6% this year. "Last year, the intensifying infrastructure upgrade cycle drove IT spending to its fastest rate of growth since Y2K," says Stephen Minton, vice president of IDC Worldwide IT Markets. "Buyer activity really picked up in the second half of the year, contributing to improved margins and revenue for systems vendors and worldwide IT spending growth of 6.9% for 2005," he adds. The research firm expects the upgrade cycle to weaken somewhat, leading to slightly weaker overall growth in 2006, says Juan Orozco, program manager at IT Markets and Strategies. "There will be greater momentum, however, in project-based spending and key application areas, including business intelligence and content management, as enterprises return to a focus on the front-end, strategic importance of technology," he adds. In America, overall growth in 2006 will be 5.8%, a slight decline from the 6.4% expansion of 2005. Strongest growth will be posted in network equipment, outsourcing services, and system infrastructure software, including security tools. Elsewhere, improving economic conditions are contributing to an enhanced outlook for IT spending in Western Europe. where overall IT growth will reach 6% this year. Asia/Pacific (excluding Japan) will enjoy 9% growth in 2006, led by double-digit spending gains in China (14%) and India (21%). "The global economy will remain stable and robust, with marginal changes in growth compared to 2005," explains Anna Toncheva, program manager and economist, IT Markets and Strategies. "Although the engines of acceleration will rotate toward Japan and Europe, China and the US will remain at the helm. Given the increased focus on productivity and innovation during the current capex cycle, IT investments will dominate replacement spending in gross investment in the developed economies."

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