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January 13, 2009

Tech sales fall 3% after seven year run

Expected to recover in 2010

By Jason Stamper

Technology markets will shrink by 3% in 2009 after a seven-year run of growth.

The latest prognosis is not all doom and gloom though, and in its latest note Forrester Research is forecasting that technology spending will recover next year, rising by as much as 9% during 2010.

Andrew Bartels, an economist and analyst with the group is quoted as saying that technology companies are well positioned to emerge from the downturn in much better shape than they did after the market collapse in 2001.

Business spending on technology should perk up in the third quarter of this year and accelerate by early 2010, he reckons.

The view is that vendors of communications equipment, software, and IT consulting and outsourcing services will see one or two quarters of declining revenues, but on average will still grow modestly in 2009.

Use of outsourcing services, which so far has defied the gravity of slow growth will continue to increase in 2009, albeit at a modest rate.

After growing 4.2% in 2008, the size of the outsourcing market will edge up again by between 4.5% and 5% for the next two years, it is estimated. This year Forrester forecasts the IT services and outsourcing market should hit $484 billion.

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Forrester expects software purchases to hold steady at around $388 billion, but reasons that capital expenditure on PCs, servers and storage systems is likely to fall by 4% or so against the levels set in 2008, and reach about $434 billion.

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