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IT Operating, Capital Budgets To Dip

In coping with the economic recession, U.S. enterprises this year are expected to lower IT capital and operating budgets an average of 3%, a market researcher says.

Among small and medium-sized companies in the U.S., IT operating budgets are expected to fall by 4% and capital spending between 2% and 3%, Forrester Research said Tuesday.

In Europe, the numbers were the same for SMBs, Forrester said. However, enterprises expected to lower IT operating budgets by 2% and captial budgets by 1%.

To reduce spending, a large number of enterprises in both regions are tracking energy costs to find ways to lower their power bills. Areas being cut throughout include software and hardware spending, but information management software and networking equipment will see lesser declines than other categories, the research firm said. IT staff would also be reduced.

Spending on IT services and outsourcing appeared to be mixed. Almost as many companies planned to use more consultants and contractors and take back outsourced activities as those that planned to cut spending on consulting and increase outsourcing.

Among SMBs, IT staff headcount and compensation were likely to stay the same this year for the majority of companies. Less than a third expected to reduce staff, Forrester said.

Hardware spending was expected to face more cuts than software. Areas that were expected to get the largest portion of spending included security in the software category and server and networking equipment in hardware.

SMB spending on IT services and outsourcing was expected to be mixed this year, albeit in different areas than with the enterprises. Almost as many SMBs planned to use a consultant or systems integration firm for business process improvements as those planning to reduce consulting and systems integration costs.

In July, Forrester dramatically lowered its 2009 global IT spending forecast for governments and businesses to 10.6% less than last year. In the U.S., spending was expected to fall by 5.1%.

On a positive note, Forrester said it still expected IT spending growth to resume in the U.S. in the fourth quarter and in the first half of 2010 in other markets.

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