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January 5, 2012updated 22 Aug 2016 10:53am

Floods and economic worries to hit IT spending: Gartner

Worldwide spending on tech to climb 3.7%, says analyst house

By Steve Evans

Industry watcher Gartner has predicted that worldwide IT spending in 2012 will total $3.8 trillion, a small rise of 3.7% on 2011’s figures.

Worldwide IT spending in 2011 hit $3.7 trillion, which was a 6.9% increase on 2010.

Gartner IT spending

Gartner had previously predicted spending in 2012 would increase by 4.6%, but has revised that figure down due to the continuing economic problems, particularly in Europe, and the natural disasters that hit parts of Asia during the year.

"Faltering global economic growth, the eurozone crisis and the impact of Thailand’s floods on hard-disk drive (HDD) production have all taken their toll on the outlook for IT spending," said Richard Gordon, research vice president at Gartner.

Gordon added that the impact of the devastating floods in Thailand, which left one-third of the country underwater, will continue to be felt for a long time.

"Thailand has been a major hub for hard-drive manufacturing, both for finished goods and components," Gordon added. "We estimate the supply of hard drives will be reduced by as much as 25% (and possibly more) during the next six to nine months. Rebuilding the destroyed manufacturing facilities will also take time and the effects of this will continue to ripple throughout 2012 and very likely into 2013."

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Gordon’s firm believes that all major technology sectors – computing hardware, enterprise software, IT services and telecommunications equipment and services – will see slower growth than previously estimated.

The telecoms equipment sector will see the best growth, Gartner says, with spending set to rise 6.9%, with the enterprise software market just behind of 6.4% growth. Telecoms services will see the slowest growth at just 2.3%, IT services will grow 3.1% and computing hardware spending will rise 5.1%, Gartner says.

Gordon says that the perilous economic situation in Western Europe will hit IT spending in this part of the world particularly badly. "With the eurozone crisis causing uncertainty for both businesses and consumers in Western Europe we have adjusted our forecast, and we expect IT spending in Western Europe to decline 0.7 percent in 2012," he said.

Nathan Marke, CTO at 2e2, said while the figures were encouraging, there is still a lot of uncertainty in the market, particularly in Western Europe.

"Many IT departments are still facing considerable cost pressures while at the same time being asked to support greater business agility," he added. "Therefore it is not surprising that two of the strongest growth areas are in enterprise software and telecom equipment. For example, many organisations are now accessing enterprise software and applications via the cloud, as it can help them reduce capital expenditure at a time when IT budgets remain tight."

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