NEW YORK – Information technology spending will continue to grow this year, but at a slower pace than in 2007, analyst Goldman Sachs predicts in the company’s latest quarterly forecast.
The report forecasts that IT spending will grow by 4 percent in 2008 due to the continuing weakness of the economy. A few months back, the same analysts had predicted 6-percent growth this year.
“Tech’s high correlation with the broader economy means that a deceleration in tech spending in 2008 appeared inevitable at the beginning of the year and seems even more pronounced” as the summer comes to an end, the report said.
IT vendors can also expect to feel more pressure to lower their prices in the coming months, the analysts said.
However, the lower-growth forecast would still be an improvement over 2006, when IT spending grew by 3.7 percent. It is also far better than in 2001 and 2002 – when IT spending shrank by more than 5 percent each year following the burst of the dotcom bubble – or the anemic growth in 2001 of less than 1 percent.
The quarterly IT-spending report from Goldman Sachs surveyed 100 managers at Fortune 1,000 companies.
Looking at where cutbacks are most likely to take place, the company’s analysts said there is little room left for more cuts in hardware spending – meaning internal IT staff and services will be hurt the most.
The report predicts the biggest decline will be in onsite IT services; half of those who responded to the firm’s survey said they planned cuts in onsite services. Offshore services are not expected to be as hard hit.
The report also said large companies and open-source vendors are in the best position to stay healthy during the coming period of lean spending.
Also of note in the report: the percentage of survey respondents who plan to support the iPhone 3G as a smart-phone option for their employees rose to 23 percent, from 17 percent in June.
For more information, visit goldmansachs.com.
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