Forrester CEO George Colony gave some slightly heartening perspective for IT vendors in his company blog last week – at least relative to the financial crisis ongoing on the Street. His firm, as some recall from earlier this month, estimated that nearly half of European and U.S. financial services firms plan to cut their tech budgets, in the midst of a technology spending slowdown that could last three to four quarters.
But in mining the details of the spending piechart, Forrester notes that the portion of IT spending that’s in most danger of being cut is concentrated with troubled firms that had a minute share of the market to begin with. Lehman Bros., Merrill Lynch, Fannie Mae, Bear Stearns, Freddie Mac, Fannie Mae and AIG all represent just 2 percent of total IT spending in the U.S. All of Wall Street comprises of only 6 percent, he notes.
[A report issued last week by the Tabb Group predicts IT spending in the securities industry is going to fall 15 percent next year to $17.9 billion.]
While vendors that rely heavily on financial services may suffer a deluge of canceled contracts—see IBM, TCS and Infosys —“changing market conditions can stimulate certain parts of the tech economy,” says Colony. Some major players like Bank of America, Barclays and JP Morgan Chase have “intensive technology integration work ahead” which will help drive professional services, software and even hardware spending.“
The biggest risk to the tech market comes not from the Wall Street collapse, but from a collateral U.S. recession,” Colony wrote.