CXO

IT budgets are on the rise - but don't expect a full recovery

As the UK tech industry prepares for a rough ride

This year will see IT spending rise for the first time since the global recession took hold - although a full-scale recovery is unlikely in the short term, analysts have predicted.

Around a third of businesses expect their IT budgets to increase in 2010, according to a worldwide survey carried out by analyst house Ovum.

Ovum is attributing this positive prediction to a general sentiment that the global economy is showing signs of recovery.

However, the research suggests the increase in IT spending won't be dramatic, with budgets expected to rise by one to five per cent year-on-year.

IT budgets beginning to increase

IT spending is beginning to rise again
(Image credit: Shutterstock)

Senior analyst at Ovum, Rhonda Ascierto, said the survey data doesn't necessarily point to an IT spending recovery but is more a reflection of the deep budget cuts made in 2008 and 2009 leaving IT departments operating at 'bare bones' capacity.

IT projects likely to be approved this year will be incremental responses to business changes rather than significant upgrades of existing systems or business processes, Ovum added.

2010 will be a year of reckoning in which businesses try to work out their IT investment strategy, rather than one of spending growth - with the "vast majority" of businesses predicting no growth at all, the analyst concluded.

Recent research published by the European Information Technology Observatory (EITO) forecasts global IT investment will increase by 0.4 per cent to hit €894bn in 2010, with increases in software investment being a major factor.

The EITO suggests this increase will be fuelled by financial service organisations beginning to invest in technology again as well as increased investment in technologies such as cloud computing.

Meanwhile projections published this week by TechMarketView point to a hard year ahead for the UK software and IT services market, with the analyst house predicting the market will shrink by two per cent.

There may be some light at the end of the tunnel for UK IT, however - the two per cent contraction is roughly half the decline seen in 2009.

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