Finance and Business Services’ IT Spending Won’t Be Severely Impacted by the Economic Downturn, IDC Says

FRAMINGHAM, MA – MAY 7, 2001 – The adverse effects of the economic slowdown on IT spending vary significantly by industry. According to IDC, the slowdown might even have a positive impact on some vertical markets’ IT spending. The global market intelligence and advisory firm says IT spending in the telecommunications and retail sectors will be the most severely affected while the finance and business services industries’ spending will experience less severe consequences.

 

"The economic slowdown hurts some verticals more than others, and the degree to which an industry is ‘recession proof’ will play a role in its IT spending. The finance sector usually fares well during a recession while retail suffers enormous pains," said Luisa Bordoni, vice president of IDC’s Vertical Markets research. "However, non-macroeconomic issues also need to be considered, including an industry’s commitment to its Web site."

According to IDC, because of their business models, some industries, including manufacturing and pharmaceuticals, are better positioned than others to experience cost savings and expanded market reach via use of the Web. Therefore, they are more willing to continue investing in their Web sites, even during an economic downturn. Information-intensive verticals, which in the past have achieved gains from Web-enabling their processes, such as finance and business services, are also more willing to continue their investments.

Although the U.S. economic slowdown is causing companies to rethink their IT spending, IDC believes in the end, most IT executives will keep their 2001 IT budgets at levels that exceed previous spending levels. “Most companies are putting off their IT investment decisions until the economic outlook gets clearer, and we believe this will happen during the second half of the year,” said Anne Songtao Lu, senior analyst for IDC’s Worldwide Vertical market research.

IDC recently published Recession Will Hit IT Spending, but Web Innovations and Structural Productivity Will Dwindle the Plunge (IDC #B24511). This bulletin analyzes a number of macroeconomic, business, and strategy factors that will cause companies to reexamine their IT spending. It outlines the varying degree to which these factors will impact different industries. To purchase the bulletin, contact Cheryl Toffel at 1-800-343-4952, extension 4389, or at ctoffel@idc.com.

About IDC

IDC is the foremost global market intelligence and advisory firm helping clients gain insight into technology and ebusiness trends to develop sound business strategies. Using a combination of rigorous primary research, in-depth analysis, and client interaction, IDC forecasts worldwide markets and trends to deliver dependable service and client advice. More than 700 analysts in 43 countries provide global research with local content. IDC's customers comprise the world’s leading IT suppliers, IT organizations, ebusiness companies and the financial community. Additional information can be found at www.idc.com.

IDC is a division of IDG, the world's leading IT media, research and exposition company.

 

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