Forrester: Tech recovery to start in fourth quarter

IT spending should pick up again in the fourth quarter in the United States, Forrester Research forecasts, followed by increased spending in 2010 in Europe and Asia.

The bad news: first-quarter spending on computing technology was worse than forecast. The good news: growth could resume earlier, according to a report Forrester Research released Tuesday.

The analyst firm reduced its forecast for 2009 information technology spending from a 3 percent decline to a 10.6 percent decline, but it's the hitting bottom, it said. Spending should return to growth in the fourth quarter in the United States, and in the first half of 2010 in Europe and Asia, Forrester said, basing its forecast on newly collected data.

"The big drops are not precursors to further declines," said Andrew Bartels, a principal analyst at Forrester. "Rather, we think they are evidence of a temporary pause in U.S. tech purchases, which we expect to start recovering in the fourth quarter, as businesses realize that they overreacted in the first quarter."

Forrester isn't alone in seeing signs of recovery.

It's "reasonable to be optimistic for 2010," said Google Chief Executive Eric Schmidt last week. And Gartner predicts that PC sales will start picking up in the end of 2009.

For 2009, some sectors are expected to be hit worse than others. Computer equipment spending should drop 13.5 percent, communications equipment's decline should be 12.4 percent, consulting and outsourcing should drop 8.6 percent, and software spending should have the smallest decrease, at 8.2 percent, Forrester projected.

Forrester has reduced its forecasts for 2009 IT spending several times.
Forrester has reduced its forecasts for 2009 IT spending several times. Forrester Research
About the author

Stephen Shankland has been a reporter at CNET since 1998 and covers browsers, Web development, digital photography and new technology. In the past he has been CNET's beat reporter for Google, Yahoo, Linux, open-source software, servers and supercomputers. He has a soft spot in his heart for standards groups and I/O interfaces.


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