Tech spend forecast cut in 'Age of Austerity'

Growth in IT spending for the year will be slower than expected, said industry analyst Gartner.

It revised its estimate for spending growth this year, shaving the rate of increase to just 3.9 percent down from the 5.3 percent growth it estimated at the start of the year. This was the result of financial pressures across sectors and the weakness of local currencies.

"The European sovereign debt crisis is having an impact on the outlook for IT spending," said Richard Gordon, research vice president at Gartner.

"The US Dollar has strengthened against the Euro during the second quarter of 2010, and this trend will likely continue in the second half of 2010."

As currencies continue to stutter so, too, will public spending. Gordon said governments would reduce debt over the next decade.

The withdrawal of funds will create a ripple effect across the economy explaining that as governments choose not to spend so, too, will other organisations.

"Private-sector economic activity will also likely be hindered because of austerity measures on key government suppliers and the indirect impact. An effective policy response will be critical to stimulate investment in general and in IT in particular."

Hardware spending will increase by a little more than 9 percent despite the economic situation and sales of PCs in particular will continue to rise. "The computing hardware sector continues to benefit from a healthy PC sector, which accounts for two-thirds of total spending in this area, and we expect PC shipments to remain robust throughout 2010 and 2011"

Gordon said many customers would update their operating systems or replace hardware.

"Consumer shipments will continue to be powered by strong mobile PC uptake, while professional shipments will be buoyed by a new replacement cycle and migration to Windows 7."