IDC forecasts $10B IT spending decrease in Canada

IDC Canada says Canadian IT spending over the next three years will fall short of its earlier prediction by $10 billion, but the industry is expected to continue to grow.

The Toronto-based research company Wednesday forecast spending from 2001 to 2003 to reach $136 billion, with the market growing 3.5 per cent this year and five per cent next year. Vito Mabrucco, IDC Canada’s group vice-president, products and services, said this is good news compared to the negative growth this year and two per cent next year expected in the United States.

The report, “After September 11: A Scenario Forecast of the IT Market in Canada,” is the collective input of more than 100 analysts from Canada and the rest of the world.

While the IT market as a whole continues to grow, some areas will fair better than others.

“The hardest hit will be in the hardware sector; so that’ll be in the PCs and the servers. Those will show some negative growth,” said Mabrucco, but adds there should be growth in data communications hardware and storage. “Generally speaking the services sector is not going to be hit as hard, and in particular within that sector there’s going to be some areas of growth like outsourcing because of the focus on reducing cost and managing cost.”

Mabrucco said there was a great deal of debate about how much the attacks on Sept. 11 influenced the revised predictions. He said the company concluded the events accelerated the oncoming decline and the industry won’t see an eight to 10 per cent growth rate until later in 2002 and 2003

“The assumptions everyone’s working off of these days could change dramatically in the next 30 to 60 days,” Mabrucco said. “So we’ve actually said in our analysis this is based on a set of assumptions that are somewhat generally accepted, but there are a number people out there who are predicting that the environment could change even more dramatically to the negative.”

Mabrucco said there are still opportunities in the market if vendors are focused on return on investment and reducing cost. He added that the current climate is temporary and there will be rebound companies need to be prepared for.

“We recommend to our vendors and our customers not to back off completely on their plans for going to market and their sales strategies because we think within six to nine months this market’s going to come back,” he said.

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