Global purchases of IT goods and services by businesses and governments will decline by 3 percent in 2009 to $1.66 trillion, according to a new forecast from Forrester Research, Inc. (Nasdaq: FORR). The 2009 drop measured in US dollars is a distinct shift from 2008, when global IT purchases increased by 8 percent. The 2009 decline ends six years of growth in global IT purchases; technology purchases fell by 6 percent in both 2001 and 2002.
“Our forecast for 2009 rests on the assumptions that the economic recession in the US and other major economies will start to end in the second half of 2009,” said Andrew Bartels, Forrester Research vice president and principal analyst. “For IT vendor strategists, the global IT market will be a gloomy one in 2009, with prospects of improvement in 2010. Unlike in past years, there are no significant growth markets to offset the weak ones.”
When measured using a mix of local currencies, the picture is a bit better, with global growth of 2.5 percent projected for 2009. Regionally in the relevant local currencies, US purchases of IT goods and services will grow by 1.6 percent in 2009; purchases in Western and Central Europe will be 1.3 percent higher than in 2008; Eastern Europe, the Middle East, and Africa will see 5 percent growth; and Asia Pacific purchases will rise by 3 percent. However, when all of the regional numbers are equated to US dollars, there is a sharper slowdown in IT spending globally.
The report highlights currency fluctuations as another key factor driving the global IT market and having a negative effect on US vendors in particular. Bartels noted, “The fact that 2009 IT purchases growth is so much weaker in US dollars than in local currencies means US vendors with significant overseas business will feel a double dose of pain, as both the economic environment and currency market will work against them for much of 2009.”
Forrester uses several metrics to determine the health and size of the IT market. The data in the Forrester report focuses on IT purchasing — how much computer and communications equipment, software, IT consulting and integration services, and IT outsourcing businesses and governments buy from technology vendors. It is one of the most important metrics for evaluating the health of technology vendors.
2009 Global IT Spending Outlook By Sector
- Software investment will do better than the average. Forrester projects global purchases of software products will be $388 billion in 2009, the same as in 2008, which is better than the declines forecast for other IT goods and services.
- Communications equipment investment will shrink. Purchases of routers, switches, private branch exchanges (PBXs), videoconferencing equipment, and unified communications equipment will fall to $353 billion in 2009, a 3 percent decline from $364 billion in 2008.
- Computer equipment investment will see the biggest slowdown in growth. Purchases of personal computers, servers, storage devices, and peripherals will slip by 4 percent to $434 billion in 2009, from $450 billion in 2008.
- Global IT services and outsourcing will decline. Governments and businesses will buy $484 billion of IT consulting, systems integration, and outsourcing services in 2009, 3 percent less than in 2008. IT outsourcing services will do a bit better than IT consulting and systems integration services, with the latter vulnerable to the slowdown in purchases of software to be implemented and integrated.
The report “Global IT Market Outlook: 2009” also provides projections for 2009 IT spending for the 15 countries that are the largest markets for IT goods and services. In addition, it draws comparisons between the “BRIC” markets of Brazil, Russia, India, and China and what Forrester calls the “Tech Twelve” markets, which use technology most intensively relative to the economy. The report projects that the Tech Twelve markets will do better in 2010 than the BRICs and is based on Forrester’s analysis of data from the U.S. Department of Commerce, the Organisation for Economic Co-operation and Development (OECD), and other sources. Forrester also analyzed the financial reports of 49 large IT vendors.
“Global IT Market Outlook: 2009” is currently available to Forrester RoleView™ clients and can also be purchased directly at http://www.forrester.com/go?docid=46676