Tech spending hurt this year by Congress

Tech spending in the U.S. will increase by a smaller amount this year than earlier predicted, Forrester Research said today. And it is blaming Congress for the forecast decline.

Instead of rising 5.7% this year, tech spending will increase by just 3.9%, Forrester said.

The federal budget sequester, the government shutdown and the threat of default “has had negative impacts on the economy, has had direct negative impacts on federal tech buying, and has indirect impacts elsewhere on CIOs who simply became cautious,” said Andrew Bartels, a Forrester analyst.

In hardware purchases, for instance, Bartels said that CIOs who might have bought new servers to meet new demand, are instead moving peak loads and special projects to infrastructure-as-a-service providers rather than add capacity. “They are not buying servers they might have otherwise bought, said Bartels in an interview.

In terms of dollars, Forrester expects total U.S. private and public spending on technology to be about $1.243 trillion this year; the 2012 figure was $1.195 trillion.

Sequestration, and federal spending cutbacks in general, are having a major impact on federal IT buying, the TechAmerica Foundation said earlier this month. Federal IT spending has declined from a peak of $80 billion in 2010 to $70 billion in the fiscal year that began Oct. 1.

The White House, in a report last week that cited private estimates, said the 16-day federal government shutdown reduced the growth rate of GDP in this quarter by between 0.2% and 0.6%.

Next year will be better, said Forrester, which is expecting U.S. business and government purchases of IT goods and services to rise by 5.3%, supported by a revived housing sector, “modest improvement” in employment and consumer spending and improved exports, Bartels wrote in a blog post.

Retrieved from ComputerWorld