News

IDC Sees Healthy IT Spending Ahead

• By Linda L. Briggs
• February 23, 2005

A February report from IDC gives a bullish outlook for IT spending in both the U.S. and worldwide, a welcome indicator that companies are apparently ready to spend on IT investments.

Worldwide IT spending, which reached $965 billion in 2004, will increase at a healthy compound annual growth rate of six percent over the next three years, according to the report.

By 2008, global IT spending will hit $1.2 trillion, IDC says.

The research firm cites an improving business environment and recent gains in gross domestic product as the impetus behind the projected gains.

"We remain optimistic about the U.S. and global IT opportunities for vendors," says Anne Lu, manager for IDC's worldwide vertical markets research program. The largest IT buyers by vertical market, Lu said, are government, banking, and discrete manufacturing.

For success in specific vertical markets, IDC urges vendors to sell solutions that address individual market needs and business challenges.

In U.S. spending alone, IDC's third quarter 2004 forecast predicts IT spending will reach $416 billion this year, up 5.8 percent from last year. IT spending will continue to grow in the U.S., IDC predicts, topping $500 billion by 2008, a compound annual growth rate of almost six percent.

Breaking out software spending from overall IT spending, the report says the U.S. will hit $100 billion in software spending this year, reflecting a yearly growth of 6.6 percent from last year to this. The largest software markets will be services, discrete manufacturing and the consumer/home market.

Predicted strong growth in the consumer/home sector, now a third of the PC market, will push spending in the U.S. PC market to $49 billion in 2005.

The IT services industry in the U.S. will reach $180 billion this year, reflecting a five percent year-over-year growth rate. IDC says the largest market opportunities for IT services are in banking, discrete manufacturing and government.