The analysts too have predicted muted or negative growth for the sector. Last week, IDC predicted that in the United States, IT spending will decline to negative 0.9 per cent, down sharply from a pre-crisis forecast of 4.2 per cent growth. Gartner too sharply cut its forecast for global technology spending for 2009, seeing declines in spending in Western Europe
However, finally there`s a good news. Research firm Forrester though sees slowdown to continue till mid-2009, it predicts a gradual bounce back in tech spending after that.
In a report, Forrestor`s Andrew Bartels outlines five reasons that promise to bring cheer to IT companies.
Falling oil prices:-
According to Andrew Bartels, the report`s author and vice president, Forrester Research, sharp fall in oil and gas prices will come as a big booster for the companies struggling with weaker economy.
As low fuel prices mean lower energy costs for transportation, logistics and chemical companies, in particular. And less money spent on fuel may mean more money for technology investments. Oil prices have dipped to as low as $42 per barrel from a peak of nearly $147 per barrel.
Barack Obama`s plans:-
President-elect Barack Obama`s economic stimulus plan may include $700 billion to $800 billion in new investments. Bartels hopes much of this will go in technology sector.
Obama has already released a broad outline of a plan that calls for heavy tech investments in schools, health care, broadband networks and energy.
Better than 2000-01 downturn:-
The research firm also said that while the US IT market outlook is bad, it is better than the 2001-02 technology downturn. “This time, computer equipment vendors will see declines of 5 per cent to 10 per cent in US revenues on a quarterly basis, not the 20 per cent to 25 per cent drops of the early 2000s,” said Bartels.
Forrester has projected a growth of 1.6 per cent in IT spends for 2009, assuming a decline in US GDP in the third quarter of 2008. The decline will accelerate in the fourth quarter of 2008 and the first half of 2009 before a weak recovery starts in the second half, the report titled “US IT Market Outlook: Q4 2008” said. It is based on an analysis of US department of commerce data and the financial reports of 49 IT vendors.
Declining interest rates:-
The falling interest rates will help improve the financial performance of banks and financial institutions. This may help in modest revival of IT spending by these companies.
Bartels predicts, "Falling interest rates will lead to improvements in the financial performance of banks and investment firms, leading to a "modest revival" in their IT purchases by late 2009."
Also, the fall in interest rates will help companies in several other sectors to make room in their budgets for capital-intensive purchases, according to Bartels.
Rise in exports:-
The so-called BRIC countries -- Brazil, Russia, India and China -- are still growing. These also happen to be the major export markets for the US. Bartels predicts that a decline in dollar vis-a-vis other currencies will push exports.
According to Forrestor, the dollar has gained value during the economic crisis because it`s seen as a safe haven. However, Bartels believes that the dollar will come down a bit relative to other currencies as the problems abate, which in turn should help exports.
The rise in exports will inturn help push tech spending.
Source:
http://infotech.indiatimes.com/quickiearticleshow/3840381.cms
