Expected US IT budget cuts less drastic than in 2001: survey

The current recession is different to the dot.com tech-wreck

Comptuer Economics, a California research firm, has found that the majority of IT budgets are either flat (17 percent) or decreasing this year (38 percent). Forty-five percent of respondents reported their budgets will grow this year.

Although dire, the numbers do not necessarily set a precedent.

In 2002, following the 2001 recession, only 36 percent of IT shops said budgets would increase, according to Computer Economics. "This indicates that the current recession, though reportedly more severe than any since the Great Depression, is actually not as acute in terms of IT spending as the 2001 recession," the report states.

The difference is likely because the years prior to the 2001 recession were marked by rampant IT spending driven by the dot-com bubble and other factors, making the sector vulnerable to cuts, Computer Economics said. Meanwhile, current economic woes are spread across other areas, such as real estate and banking.

IT cuts could also be worse if IT executives, apparently learning a lesson from the previous recession, had not held down spending growth in recent years, the firm added.

Computer Economics polled 202 North American IT executives in the first quarter of this year. The survey also showed that forty-six percent of North American IT shops are planning to cut positions this year, up from 24 percent last year, with one-quarter planning to slash staff by 10 percent or more, according to a newly released study by Computer Economics.

The findings indicate widespread doubt among IT executives that the recession will end soon.

Only 27 percent intend to increase headcount, and another 27 percent plan to keep staffing levels flat, the study also found.

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