GGlobal tech spend turns corner

Global tech spend turns corner
Oct 8 AFR
Ben Woodhead

Global information and communications technology spending is on track to surpass $US2.3trillion ($4.2trillion) in 2002 as strengthening telecommunications expenditure leads to a tentative recovery in the ICT market.

New figures from research company Gartner Dataquest suggest that global technology spending would grow 3.4 per cent this year, after the market shrank 0.4 per cent to $US2.23trillion in 2001.

Rival analyst IDC in July this year estimated that worldwide spending on information technology alone would rise 3.7 per cent this year to $US981billion. IDC predicted information and communications technology spending for 2001 would be $US2.4trillion.

In a report released last night in the United States, Gartner Dataquest said that the Asia Pacific region would have fast growth, piling on a 5.8 per cent spending increase to $US258.9billion as the burgeoning information economies of China and India gathered steam.

Growth in the more mature Australian tech sector, however, would more closely mirror the North American markets.


Continued soft spending on new projects, however, put a dampener on the otherwise good news for the sector.


Telecommunications was by far the largest ICT market, contributing 58.4 per cent of global spending and 70.9 per cent of Asia Pacific spending. According to Gartner, total global technology spending would decline 0.5 per cent if fixed and mobile telecom services growth was discounted.

Gartner Australia research analyst for IT trends, Daniel McHugh, said the high capital expenditure demands of the telecommunications sector ensured it would continue to deliver the largest proportion of ICT spending.

Internationally, telecommunications expenditure would grow by 4.8 per cent this year, while in Asia Pacific it would increase by 5.5 per cent.


The IT services sector continued to cement its importance, closing in on hardware as the second most important Asia Pacific technology market. Hardware retained the number two spot with $US38.6billion compared with $US31.3billion for IT services.

However, the hardware market grew by just 3.6 per cent compared with a 10.2 per cent growth spurt for services. Globally, hardware spending declined 1.3 per cent, while technology services grew 2.8 per cent.

Software spending around the world was up by 3.6 per cent. In Asia, it rose 6.5 per cent. It remained by far the smallest ICT market.

In contrast, IDC found worldwide spending on hardware would decline 4 per cent this year. However, rises in software and services expenditure ensured the market would post overall growth, the company said.

While the apparent recovery in ICT spending was welcome news, there remained concern for a market that had taken a severe battering over the past 24 months. Among them was the continued clamp down on new spending spurred by massive over investment during the dot com boom.

"In some areas we're seeing new spending, like security. But for the majority of spending, [buyers] are increasingly looking at how to get greater efficiencies out of existing implementations," said Mr McHugh.

He said it would be at least 2004 before the Australian and international ICT markets could expect to have increases in new project spending.

IDC took a more optimistic view, saying that spending on new IT projects could improve during 2003.


Looking ahead, Gartner predicted the global information economy would increase by 7 per cent to be worth $US2.5trillion in 2003.

In Asia Pacific spending would rise by 9.9 per cent to $US284.6billion.

However, an ongoing recovery was not a given, Mr McHugh said, and war could again cause a spending freeze.

IDC estimated a 9 per cent growth in IT spending in 2003, taking the global market to $US1trillion. Expenditure on IT products and services would rise to $US1.5trillion by 2006, the market researcher said.