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Big Companies Curb Tech Spending

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The Associated Press

Published: September 10, 2008

NEW YORK - Many large companies, especially those in the financial services, utilities and telecommunications industries, have cut their technology budgets this year because of the economic slowdown.

In a report released Tuesday, Forrester Research Inc. found that 43 percent of large U.S. and European businesses it surveyed have cut their overall spending on technology products and services in 2008. Some companies, meanwhile, have put discretionary spending on hold and others are planning to negotiate lower rates for information-technology services.

The research firm did not change its annual technology spending forecast, but it is reviewing it. In its most recent forecast, in February, Forrester had said it expects tech spending to grow 2.8 percent this year.

That marked a significant downward revision from a December 2007 forecast of 4.6 percent growth.

Tuesday's report, said Forrester vice president and principal analyst John McCarthy, is "really just a snapshot" of companies' spending sentiments.

In general, corporate technology buyers were less optimistic than they were in the last such survey, in October 2007, just before the credit market tightened and the housing market "really fell apart," McCarthy said.

Forrester's survey found that the effects of the economic downturn varied by geography and by sector. U.S. companies were more likely to cut their budgets than those in Europe, for example.

Although companies in finance, utilities and telecommunications are tightening belts considerably, those in media and entertainment are spending more. McCarthy noted that such companies are going through a "fundamental upheaval" that requires they spend on technology.

In the survey, taken in late May and early June of nearly 950 IT managers at companies in North America and Europe, nearly half of the U.S. respondents said they have cut their IT spending budgets, compared with 38 percent of those in Canada and 28 percent of companies in Germany.

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