• October 18, 2006
  • By Coreen Bailor, (former) Associate Editor, CRM Magazine

Europe Will Up IT Spending

Western and Central European countries have a stronger combined GDP than the United States, but Europe is forecasted to shell out more than $150 billion less in IT expenditure than what the U.S. will in 2006, according to Forrester Research. The firm expects Europe to spend $565 billion in 2006 on computer and communications equipment, software, IT services and outsourcing, and IT staff, compared to the U.S.'s $721 billion. In U.S. dollars, European IT spending will increase by 5.1 percent in 2006 and then taper off to 3.7 percent in 2007, while the U.S. will do a 5.8 percent uptake in IT spending in 2006 before dropping to a growth rate of 2.9 percent in 2007. These, and additional findings, are derived from "European Enterprise IT Spending: 2006 To 2007" and "European IT Spending 2006: Country-By-Country." Forrester expects new investment in computer and communications equipment and software to rise by about 4.5 percent in 2007, following 2.1 percent growth in 2006, thanks in large part to guarded European CIO spending plans this year. "While 2005 was a relatively strong year for IT spending in Europe, 2006 arrived with a mix of positive and negative indicators for the continuation of this trend," Andrew Parker, vice president at Forrester, said in a statement. Parker notes that on the positive side, forecasters expect nominal GDP growth for all European countries in 2006 to be 3.9 percent, up slightly from 2005's 3.7 percent. He adds that Q1 2006 IT vendor data on European revenues was 8 percent higher than Q1 2005, but European CIOs were planning average budget increases of a mere 1.6 percent moving from 2005 to 2006, which will ultimately translate into moderate growth. When segmented by country U.K. businesses and governments are expected to spend the most in IT goods and services in 2006-euro61 billion. The U.K. is trailed by Germany (euro57 billion), and by France and Italy, with roughly two thirds the size of the U.K. or German markets, according to Parker. Spain, the Netherlands, and Switzerland are forecasted to spend euro15 billion to euro 20 billion. Belgium and Sweden are each projected to spend about euro10 billion, while Denmark, Austria, Poland, Finland, and Norway are each expected to spend euro5 billion to euro7 billion. All the other markets will spend less than euro5 billion each, Parker adds. "While U.S. IT spending has been growing faster than European IT spending in recent years, European IT spending growth is now poised to exceed that in the U.S.," Andrew Bartels, vice president at Forrester, said in a statement. "With European economic growth showing signs of improvement while the U.S. economy is likely to slow down, 2007 will be the year when European IT spending grows more rapidly than that in the U.S. or Canada." Related articles:
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