Meltdown to slow worldwide IT spending in 2009

On a day when British Telecom announced 10,000 outsourcing job cuts, research agency IDC painted a grimmer scenario for the IT sector, predicting a sharply lower growth in worldwide IT spend. It said IT spending would grow only by 2.6% in 2009, down from 5.9%, with 0.9% growth in the US.

With the global financial crisis creeping into most sectors of the world economy now, worldwide IT spending is expected to grow by 2.6% in 2009, down from the pre-crisis forecast of 5.9% growth. According to the revised forecast from the research agency IDC, IT spending growth in the US is expected to be 0.9% in 2009, while that of Western Europe and Japan are expected to hover around the 1% range. Considering that the Indian IT industry derives around 90% of its revenues from the US and the UK market, this could mean greater pressure on revenues.

"Firms cutting their budgets by half does not mean that revenues of Indian IT companies will also go down by that number. As companies try to get the maximum bang for their buck and optimise their costs, there could be more work coming the Indian way," said Ganesh Natarajan, chairman, Nasscom. He added there could be a 15-20% impact on the revenues as the demand slows down to some extent.

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