Awful 2009 Tech Spending Will Lead to Faster Rebound

Posted by: Rob Hof on June 30, 2009

Worldwide spending on information technology equipment and services will plunge 10.6% in U.S. dollars, according to a new report from Forrester Research. That’s way down from the market research firm’s forecast at the start of the year, which predicted only a 3% drop.

The U.S. will fare relatively better than the rest of the world, with spending there forecast to fall 5.1%. According to Forrester, purchases of computer equipment will be down 13.5% for the year, communications equipment down 12.4%, software down 8.2% and IT consulting and outsourcing down 8.6%.

But the precipitous drop in first-quarter tech spending will mean a faster-than-expected recovery starting later this year, according to analyst Andrew Bartels (and flagged in a mid-April story in BusinessWeek):

While Q1 2009 saw a scary drop in purchases in the US tech market, ironically that is good news for the long run and we expect to see a stronger rebound sooner. The big drops are not precursors to further declines; rather, we think they are evidence of a temporary pause in US tech purchases, which we expect to start recovering in Q4 as businesses realize that they overreacted in the first quarter. We also expect that tech markets in Europe and Asia will start to recover in the first half of 2010.

It appears that investors also are already anticipating this. The tech-driven Nasdaq is up 17% so far this year, compared with less than a 3% rise in the S&P 500.

Reader Comments

Strategery

June 30, 2009 8:39 PM

A rebound for whom? It seems that tech spending does not benefit Americans anymore. The work that cannot be outsourced is done by immigrants (Indians for high-tech and Mexicans for the grunt work of installing cables, etc.); semiconductor manufacturing is in Taiwan, Malaysia, etc., assembly work is done in China, 'American' software development and support is done either in India or in the USA by Indians.

Adam

June 30, 2009 11:27 PM

The rosey picture is for only the stock price in the future. The job is gone to India and we don't expect any rebound in the job market. The technology sector will be dead in US we will be importer of the crappy code from sweat shops in India. Unless there is policy change in Obama administration to keep the technology jobs in US and don't hand it to our worse enemy i.e the Indian outsourcing machine it will be too late and the end of technology lead which made us super power.

Smith

June 30, 2009 11:28 PM

Yeah only rosey picture for gready CEOs or the outsourcers in India.

indian

June 30, 2009 11:41 PM

The owrk is being done by indians because the american is not able to do the same work, if thye would have done why would they allow indians to come into this field.

Dave55

July 1, 2009 9:11 AM


Follow the money and you'll find as the econominc engine in India heats up, commensurate wages will go up, raising the standard of living there. Americans simply have to get used to the fact that we can keep jobs here, but at a huge % loss in income.

AJ

July 1, 2009 1:37 PM

Why should we trust Forrester's research? they were clearly very wrong about their initial forecast for 2009, why should we believe anything they say about 2010? I can see the article now:
"Forrester, last July, predicted that tech spending would rebound by X%, but now says it will actually fall Z%

jkorn

July 1, 2009 5:12 PM

A rebound in the amount of NRI's sending money our of the US to India, maybe. There aren't enough Americans in tech left for it to even make a dent.

Kartik

July 1, 2009 6:59 PM

Strategery is a xenophobe.

He does not even want Indians to come to the US to do these jobs. Nevermind that they pay taxes in the US, buy US goods, consume surplus US real estate vacancies, etc.

And after several years, these Indians become US citizens. Their children are BORN IN THE US. Thus, they, and their children, become Americans.

But strategery still opposes this. They are still 'outsiders' in his view, even the US-born children.

Strategery is a perfect example of an obsolete bigot who has been swept aside by the market forces of the 21st century.

Kartik

July 1, 2009 7:01 PM

Smith and Adam are also bigots, by the way.

What if Bobby Jindal runs for President? What if he actually wins? He is a Republican, you know.

otto

July 2, 2009 2:35 PM

do you guys even work in IT? I work with It Directors and CIOs all day long and maybe 1 out of every 50 is outsourcing. But what ever, keep waiting for the sky to fall

Dave

July 7, 2009 12:09 PM

Many americans can do the IT work, but their wages have been drastically undercut by the Eastern Indians. They are master negotiators, and they have convinced a desperate American management that their prices would improve the American corporations bottom line.

And yes, once the Indians cost of living and an increase in Salary demands catch up, some other country will do the same to the indians.

Yes, we need to get real creative to compete! AND SOON!

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Bloomberg Businessweek writers Peter Burrows, Cliff Edwards, Olga Kharif, Aaron Ricadela, and Douglas MacMillan, dig behind the headlines to analyze what’s really happening throughout the world of technology. Tech Beat covers everything from tech bellwethers like Apple, Google, and Intel and emerging new leaders such as Facebook to new technologies, trends, and controversies.

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