Emerging Markets Take up IT Spending Slack


Growth in India's domestic IT market outpaced growth its export market in 2007-08, as I wrote earlier this month. So it's no big surprise that in Gartner's latest tech spending report, emerging markets like India appear to be taking up some of the spending slack of the slowing U.S. economy. This dynamic also helps explain why tech giants like IBM and Cisco are beefing up their presence in these markets.


According to Wall Street Journal blogger Ben Worthen, Gartner expects global IT spending to hit $3.4 trillion in 2008, an 8 percent increase over 2007. Unfortunately, however, Gartner attributes much of this growth to the declining U.S. dollar, which boosts the performance of U.S. tech vendors. In constant currency levels, the growth is more like 4.5 percent.


The big global spending winners: software, which Gartner predicts will grow 10 percent to reach $196 billion this year; IT services, up 10 percent to reach $819 billion; and telecommunications gear and services, up 8 percent to hit $2 trillion.


The U.S. numbers aren't as optimistic. Gartner expects growth of 7.2 percent in U.S. software spending, 6.4 percent in IT services and 3.9 percent in telecom. Overall, U.S. tech spending will increase 4.4 percent this year, significantly less than growth of 6.1 percent in 2007.


Gartner forecasts major shifts in spending, with many companies ultimately moving to software-as-a-service and cloud computing models, reports ComputerWeekly.com. Such changes will "result in dramatic growth in IT products in some areas and in significant reductions in other areas," says Gartner analyst Jim Tully.