News

IT Spending Budgets Not Yet on Upswing

• By Chris Paoli
• June 24, 2010

Computer Economics has painted a pessimistic view for IT budgets the near future.

In its "IT Spending and Staffing Benchmarks 2010/2011" study, the Irvine-based research and advisory group has found that while current economic hardships may be close to bottoming out, look for reduced IT budgets and additional personnel cuts for the remainder of 2010.

The study finds notable contrast with more positive IT salary predictions released last week by Janco Associates, although that study noted that many midsize companies still aren't hiring.

Computer Economics surveyed more than 200 companies in the United States and Canada, finding that 42 percent of responding enterprises will be reducing the overall size of their IT staffs this year. That number is close to the 46 percent mark measured by Computer Economics in its study last year.

The new study also found that 48 percent of IT executives feel their decreased spending plans are "adequate" or "more than adequate" to meet their company's goals. This finding represents a downturn compared with last year's 58 percent positive mark. The new study also found that 44 percent of respondents feeling their budget is "somewhat inadequate" and eight percent believing theirs is "very inadequate."

The government sector saw the greatest decrease in budget spending, dropping five percent over last year due to the decline in income, sales and property tax revenue. This negates the five percent growth that the sector saw in this same time last year. While not as big as a drop in budget as government IT projections, the retail sector (down 1.5 percent) was the only group that saw a decline in its median operational budget for the second year in a row.

On a positive note, the group also found that only 27 percent of IT executives expect additional cuts to their overall spending budgets for this year. This is a good sign that the economic downturn may be on its way to recovery, as last year's study found 49 percent of executives expected cuts to their 2009 budgets.

Some sectors also saw an increase in their median operational budgets, with the commercial banking and healthcare industries seeing a rise of 3.2 percent and 3.1 percent in IT spending, respectively.

The degree to which organizations planned to reduce spending and cut staff in 2010, per the survey, was somewhat surprising, according to Frank Scavo, president of Computer Economics. "This is more downbeat than we had anticipated," Scavo said in a released statement. "The one positive note is that many IT executives anticipate no further budget cuts this year. So, hopefully, the worst may be over."  

A free overall summary of the study can be found here.