Global spending on the information technology (IT) sector is projected to increase by 6.3% this year, with the majority of expenditures directed towards software. However, this figure remains lower than last year’s growth rate of 6.9%.
The global market research firm IDC reported that total spending on the global IT industry reached $1 trillion in 2005. This figure is expected to rise by an additional $100 billion this year.
Stephen Minton, Vice President of Global IT Market Research at IDC, noted that in 2005, spending on hardware increased by 9%. This marked the fastest growth rate for the hardware sector since the Y2K event.
However, this year, the hardware sector may not maintain that growth rate due to decreased demand for hardware upgrades and infrastructure, which is currently not as high as in previous years.
Forecasts suggest that the hardware sector will achieve a growth rate of only 6% this year, while spending on software is expected to grow by 7%.
In 2004, spending on the IT sector increased by only 5%, according to Minton. The projections for 2006 appear relatively optimistic.
“The outlook for the IT sector is brighter compared to most other industries. However, I believe that the IT sector is unlikely to achieve double-digit growth as it has in the past.”
In 1995, IT spending grew by as much as 14%. The main driver for this growth at that time was the development of the web and Microsoft’s Windows 95 operating system. The double-digit growth rate continued until 2000. However, following the collapse of the “dot-com bubble,” IT spending has significantly declined.
In the United States, overall growth this year is expected to be 5.8%, lower than the 6.4% recorded in 2005. The strongest growth will occur in areas such as networking equipment, outsourcing services, system software, and security tools.
Meanwhile, IT growth in Europe is projected to reach around 6% this year. The Asia-Pacific region, excluding Japan, is expected to achieve a growth rate of 9%. China continues to maintain a double-digit growth rate at 14%, while India leads with 21%.
IDC forecasts that IT spending will continue to grow at about 5% until 2009. The growth rate is expected to gradually decline as certain IT sectors become saturated, particularly in networking hardware.
