Information technology sector recovery expected

Associated Press

After suffering its largest decline ever in 2002, the worldwide information technology industry is expected to grow by more than 5 percent next year, according to a research group.

The $875 billion industry shrank about 2.3 percent this year, according to Framingham, Mass.-based research firm IDC.

That compares to an annual growth rate of 20 percent over the past two decades.

"Looking forward to 2003, we expect to see spending on IT and communications resume, driving a worldwide growth rate of 5.8 percent for the industry," said John Gantz, IDC's chief research officer.

Still, growth next year is expected to be anemic. Software spending will be weak, and hardware revenue growth is expected to suffer from stiff price competition.

The research firm also cautioned that a prolonged war in Iraq or collapse of the stock markets could limit spending.

In the United States, demand for server, security and network equipment is expected to drive a 4.4 percent increase in IT spending in 2003. Storage and software products will see greater growth starting in 2005.

But revenue from personal computer sales are expected to decline after 2004.

"Although the industry as a whole won't return to the kind of growth enjoyed before the downturn, there will be a number of bright spots over the next several years," said Stephen Minton, IDC's director of worldwide markets and strategies.