Celent’s previously tepid outlook for global brokerage IT spending has now gone into the red.
The Boston-based research firm is forecasting a 7 percent dip in overall IT expenditures in 2009, as capital markets firms in North America, Europe and Asia brace themselves for the “long winter ahead.”
Last April, Celent felt the credit crisis would keep spending relatively flat through 2009, at a 1.9 percent annual growth rate. “This new era of volatility and uncertainty makes predictions more difficult,” Celent reports in its update. CIOs and CTOs are “reviewing even their most pessimistic assumptions and revising their IT budgets down even further.”
Keep in mind those original numbers also came during a time when the U.S. investment banks were coming to grips with their overleveraged subprime exposure, not their day-to-day survival. With the huge blow to current sell-side IT spending, Celent sees only long-term prospects for recovery based on integration efforts from commercial bank take-overs and the greater deposit-position of Goldman Sachs and Morgan Stanley as they convert their charters.
On the trading side, Celent expects that new strategies will develop to take advantage of the volatility, which will mean that new risk management solutions, trading tools and software “to value and trade volatility might be a market strengthened despite overall weakened spending.”