Analysts cut spending forecasts for year ahead

Analysts cut spending forecasts for year ahead

IDC and Forrester hack back global IT spend with warnings of soft growth in Europe

IDC and Forrester have sent shockwaves through the channel by slashing their global IT spending forecasts and warning of softening conditions in Europe.

Research giant IDC has lowered its global IT growth forecast for 2008 to five per cent, citing recent downward revisions to macroeconomic indicators. At the same time, rival Forrester chopped its forecast from nine per cent to six per cent.

IDC added to the gloom by pointing to soft conditions in Europe, where it expects IT spending growth to hit just four per cent ­ down from five per cent last year. Forrester foresees an even more dramatic drop, with Western European growth in dollar terms expected to slow from 15 per cent last year to five per cent.

Ian French, managing director of channel consultancy Siceo, warned that the UK could expect a bumpy ride in 2008 as the credit crunch takes hold. “One significant area is the public sector, which has been splurging for a long time and has accounted for a significant proportion of sales. The government is definitely slowing down spending now and it is tough for everyone,” he said.

However, Nick Grossman, business development director at VAR 2e2, was unfazed by the prophecies of doom: “Western European growth has been at about four or five [percentage] points for some time and it will not change for the next two or three years,” he said.

“There will always be hot areas, such as virtualisation, where efficiencies can be made, whereas discretionary spend will be more difficult.”

Andrew Bartels, vice president of Forrester Research, said: “The risks [of a US recession] are high enough to justify a more conservative outlook for the IT market. The US remains the largest market for IT goods and services, so it is no surprise that the global market is affected by it.”