IT Spending Hits Bottom, But Fails to Bounce as Layoffs Continue

IT organizations are continuing to shed jobs this year and show no growth in spending on operations or capital projects, despite the still-tentative recovery in the broader economy, according to the 21st annual Computer Economics IT Spending and Staffing Benchmarks 2010/2011 study.

“The one positive note is that many IT executives anticipate no further budget cuts this year. So, hopefully, the worst may be over.”

The study, which assesses IT spending plans for more than 200 organizations in the U.S. and Canada, found that 42% of IT organizations are reducing the size of their IT staff this year, a level that is roughly equivalent to 2009, when 46% of organizations reported reductions in IT headcount. In contrast, only 28% of the survey respondents reported their budgets for fiscal 2010-2011 will enable them to hire additional staff.

"This is more downbeat than we had anticipated," said Frank Scavo, president of Computer Economics, an IT research and advisory firm based in Irvine, Calif. "The one positive note is that many IT executives anticipate no further budget cuts this year. So, hopefully, the worst may be over."

In fact, IT executives indicate they are more confident this year that they will get to spend all of the money in their budgets: 58% expect no further budget reductions while 15% are hopeful they will get authorization to exceed current spending plans. Only 27% anticipate further budget reductions, an improvement over last year when almost half of all IT executives were bracing for budget cuts.