IT Spending Holding Its Own

By CIO Update Staff

(Back to article)

Worldwide vertical market IT spending is projected to total $2.7 trillion in 2009, a 0.5% increase from 2008, according to Gartner. Utilities, healthcare and government are expected to be the strongest-growing segments of the market in 2009.


“The economic slowdown triggered by the U.S. subprime market crisis, along with fluctuating oil prices and currency exchange rates impacted many industries and countries around the world in IT spending,” said John-David Lovelock, research VP for Gartner, in a press release. “Internal spending, hardware and system integration in the financial sector were particularly hard-hit in 2008 and will continue suffering through 2009. In contrast, healthcare grew 8.3% worldwide in 2008, and utilities grew 7.7%.”


The utilities industry is forecast to grow the most in 2009 with 2.9% growth. Smart grids and energy supplies are viewed as national and strategic issues in many countries, and spending on IT is a necessity. The healthcare industry is expected to post the second-highest increase in 2009 with 2.2% growth. Countries in which healthcare is primarily publicly funded will be sheltered from the worst of the economic turmoil, and governments tend to keep healthcare funding at least stable during the worst economic conditions.


Uncertainty about the depth and duration of the economic slowdown dominated the banking and investment sector in the last quarter of 2008. This uncertainty led to declines and postponements in IT spending at many large financial services companies. This is expected to continue in 2009 as worldwide financial services IT spending is forecast to decline 0.7%.


The U.S. financial services sector is forecast to be hardest hit, however, major IT investments in less-affected countries such as Canada and Mexico and regions such as the Middle East and Africa will minimize the decline in the sector worldwide.


Regional Spending


Vertical-market IT spending in the U.S. in 2009 is projected to grow 0.1%. Healthcare is expected to be the strongest performer in 2009 with 2.6% growth. Financial services is projected to be the weakest with a 2.2% decline from 2008 spending. Spending in Europe, the Middle East and Africa in 2009 is expected to decline 0.3% with utilities showing the strongest growth and services posting the weakest.


Latin America and Asia/Pacific vertical market IT spending are forecast to grow 4.4% and 2.9%, respectively. Latin America’s growth is spurred by continued IT expansion in Brazil, Peru, Argentina and Chile, while in Asia/Pacific, countries such as India and China will continue to spend on third-generation and next-generation infrastructures. Japan will continue to struggle in 2009 with IT spending forecast to decline 0.1%.


“The slowdown in economic output (revenue) growth will continue to have a significant, but uneven, impact on IT spending across industries and within industries, as companies continue to adjust cost structures to preserve earnings. Technology service providers that go to market aware of and aligned to industry sub sectors needs will perform best,” said Lovelock.


Additional information is available in the report Dataquest Alert: Utilities, Healthcare and Government Lead IT Spending Growth in Challenging 2009.