The forecast is included in a compilation of top 10 technology predictions from various Gartner analysts.
While increased IT spending in the Asia-Pacific region is likely to prompt a slight recovery for the year, the industry will continue to go through a shakeout, Gartner predicted.
Economic recovery expected for the latter half of the year will help boost demand for IT products and services, the report predicted, but spending will be hampered by lean corporate budgets set earlier in the year. Such financial pressure will push businesses to outsource more IT functions to outside contractors, said Gartner analyst Lisa Stone, rather than expanding internal IT departments.
"Companies want to gain more flexibility," she said. "We see a shift in money moving from the capital budget to the operating budget."
However, the decreased spending overall means even companies that provide contract services will also take a hit.
New IT initiatives--whether outsourced or internal--will be more closely scrutinized as budgets remain tight, Stone added. "It's going to be very focused on bottom-line results," she said.
Security and privacy projects will continue to be a priority because of the Sept. 11 terrorist attacks, Gartner predicted.
"Inside business, sponsors of security, privacy and business-continuity programs will practically write their own ticket for funding and resources," according to the report.
The report also forecasts solid growth for Internet-delivered software services and wireless corporate networks, while predicting a shakeout in customer relationship management (CRM) software and wireless applications.
"More than 50 percent of mobile applications deployed at the start of 2002 will be obsolete by the end of 2002," according to the report.