IDC: Threat of long war to curtail IT spending

Margie Semilof

The potential for a longer war in Iraq has caused one market research firm to reduce its quarterly predictions for IT spending.

International Data Corp., Framingham, Mass., released this week a new forecast for its IDC 2003 Worldwide Black Book, which predicted that IT spending for 2003 would be about $852 billion -- a 2.3% increase from the previous year.

The research firm had previously forecast a growth of 3.7%, but has reduced the figure because it had assumed that the war would be brief, said Stephen Minton, director of IDC worldwide markets group. Growth in the U.S. will be about 1.5% and about 2% in Europe. Japan will see a 1.4% decline, the research said.

"The war is the reason the market is performing weaker [than expected]," Minton said. "Uncertainty of war had an impact on the first three months of the year, and now there is the war. So it all creates a drag on IT spending."

Minton has predicted that the overall market will return to a 6% or 7% growth rate within the next three to five years. He has forecasted a 6% increase for all system software over the next year and 8% for system software the year after.

A certain amount of this is tied to spending for projects that companies must complete, he said. A lot of projects have been postponed during the past two years, so now there is some pent-up demand.

"It's not enough to put spending back to where it was, but it is still more than last year," he said.

If the war continues into 2004,

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he said, "there is no way we will get up to 6% growth in IT spending."

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