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Worries over IT spending

Growth in technology spending by companies and the public sector is stabilising at much lower levels than last year, due to economic worries in many key markets, research firm Gartner said on Monday.

“While the challenges facing global economic growth persist ... the outlook has at least stabilized,” said Richard Gordon, research vice president at Gartner, noting anxieties linked to the euro zone crisis, weaker US recovery and the slowdown in China.

Informatica shares dived 30 percent, dragging down other tech names exposed to corporate tech spending including Citrix Systems, EMC, Red Hat and VMware. Credit: AFP

Gartner now expects global IT budgets to rise 3.0 percent this year to $3.6 trillion, instead of a previously forecast 2.5 percent gain, but in constant US dollar terms its forecast is unchanged at 5.2 percent.

That compares with a 7.9 percent rise in spending in the sector last year, Gartner said, with growth slowing in all five parts of the sector: computing hardware, enterprise software, IT services, telecom equipment and telecom services.

For the $1.7 trillion telecom services market - single largest component of the sector - growth will slow to 1.4 percent this year from 6 percent seen in 2011, Gartner said.

Worries over corporate technology spending came to the fore on Friday when software maker Informatica posted results far below expectations, saying business conditions worsened sharply in June.

Informatica shares dived 30 percent, dragging down other tech names exposed to corporate tech spending including Citrix Systems, EMC, Red Hat and VMware.

Some investors worry that Informatica's results could signal the European crisis is taking a higher toll on tech spending, than they previously thought. - Reuters

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