Global IT budget growth tracks according to expectations

04/27/04 - Merrill Lynch

LONDON, April 27 (New Ratings) - Analysts at Merrill Lynch say that the global IT budget is expected to grow 2%-3% this year, in-line with the expectations.

According to Merrill Lynch's research note published this morning, the IT budget growth in Q1 was in-line with the expectations. Merrill Lynch's TechStrat Survey, which was conducted among 75 US and 25 European CIOs, suggests that the IT budget growth trend is likely to continue at the same pace during the remaining part of this year, the analysts say. According to the survey, software spending is likely to constitute a significant portion of IT budgets this year, followed by services and hardware, the analysts add.

Merrill Lynch's TechStrat Survey indicates that software prices are likely to decline in the forthcoming quarters. Open source code softwares are expected to exert pressure on the global software infrastructure sector, the analysts say. According to Merrill Lynch, Windows and Unix are the most susceptible to being commoditized in the forthcoming quarters, on account of increasing competition from Linux. The CIO’s outsourcing plans are unlikely to be adversely affected by the political pressures in the US, Merrill Lynch's TechStrat Survey suggests.

Merrill Lynch believes that enterprise software spending would continue to improve in the forthcoming quarters.