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June 6, 2002 | 1130 IST
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Slow growth in spend to stall IT recovery till 2003: IDC

BS Corporate Bureau

Contrary to expectations of a recovery in the information technology sector by the second half of calendar year 2002, the International Data Corporation has said the recovery will have to wait till 2003 as the total spending in the sector is yet to pick up.

According to IDC, the total spending on information technology in 2001 was estimated at Rs 249.52 billion, representing a growth of only 10 per cent, as against 36 per cent in 2000.

"A poor year," is what IDC calls 2001. The figures include all domestic spending on hardware, software and services. However, 2001 had seen at least one quarter (January-March) of good growth before the slowdown began in the second quarter (April-June).

The market conditions of 2001 have continued into the first half of 2002, with a slight recovery expected in the third and fourth quarters. IDC pointed out that "lacking even one high-growth quarter, 2002 would see a growth of only 8 per cent in spending."

"Spending on information technology has not picked up in the last 12 months. This is due to the economic slowdown and the slump in spending," said an analyst with IDC.

Hardware is particularly under pressure, with its share in the total information technology spend predicted to decline from 62 per cent in 2000 to 58 per cent in 2002.

However, the segment is expected to recover somewhat at 59 per cent in 2003. The share of services is also likely to increase, owing to the essential nature of maintenance, support and outsourcing.

Improvement in market conditions and sentiment in 2003 could lead to a spending growth of 21 per cent, the report said.

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