Wall Street Beat: 2013 IT spending forecasts look upbeat

IDG News Service - As the economy improves and at least some of the concerns about the so-called U.S. "fiscal cliff" are resolved, desire for new mobile, analytics and storage technology will drive IT spending this year, according to market researchers and economists.

The first batch of IT spending forecasts for the year are already in, and they look positive relative to the doldrums the tech industry was in during the last six months.

Global IT purchases will increase by 3.3 percent in 2013, in terms of U.S. dollars, to US$2.1 trillion, according to a Forrester report released this week. Because the dollar has been strong relative to other currencies recently, however, a better way to understand IT spending growth is to look at the spending increase in terms of local currencies, according to Andrew Bartels, chief economist at Forrester. In local currency terms, IT spending growth this year will be a relatively healthy 5.4 percent, he noted.

Next year will be even better, with worldwide spending on IT increasing 6.1 percent in U.S. dollars and 6.7 percent in terms of local currencies, Forrester forecasts.

The partial deal on the fiscal cliff reached by the U.S. Congress this week will help unlock corporate coffers, Bartels said. The fiscal cliff was a series of government spending cuts and tax hikes set to kick in during 2013 if a budget compromise was not reached. Congress worked through New Year's eve and New Year's day to reach a compromise on taxes, which calls for, among other things, an increase on income taxes only for the wealthiest Americans, though a payroll tax on wages will come into effect.

Congress still needs to work out an agreement on government spending over the next two months. "But two-thirds of the impact of the fiscal cliff had to do with taxes," Bartels said. "Especially in the second half of 2012, you had U.S. businesses go into a capital spending freeze because of worries about going into a fiscal cliff recession."

Removing much if not all of those concerns also removes many barriers holding back U.S. investments on new technology, particularly around mobility, analytics and collaboration software, said Bartels.

In addition, as Europe continues to comes to terms with its debt problems and climbs out of recession, and China resolves political problems around a transition in leadership, areas of the world outside of the U.S. will also start to grow faster in 2013, leading to greater IT spending in 2014, Forrester said in its report.

Software, at $542 billion, will remain the largest category of global IT purchases in 2013, and will experience growth of 4.4 percent in dollar terms, IDC said. Computer equipment, at $416 billion, is the second-largest category, but will remain weak with just 2.1 percent growth this year, Forrester said, after 1.2 percent growth in 2012.