Local IT spending expected to rise 4.5% in 2008

Local IT spending accounts for 3.2% of the GDP, more than the 3% in Germany, but less than the 3.5% in the US.

As the local market continues to rely more on technology to power business, spending on information technology in Israel will post a substantial increase in 2008, rising 4.5 percent to $4.6 billion, the technology research company IDC-Israel said on Tuesday. Over the next five years, more than $25b. will be spent, an increase of 38% above the $18b. spent locally on IT during the previous five years. "We expect this growth based on the trends that will take place in the global market over the next few years," Gideon Lopez, managing director of IDC-Israel, told The Jerusalem Post at a Tel Aviv press conference. "Companies here, like everywhere else in the world, are going to be much more dependent on technology in order to help develop business, something that will lead to significantly more spending." In its 2008 outlook report, the IDC said spending on IT services will grow 4.9% to $1.7b.; sales of personal computers will jump 5.4% to $929 million; software sales will increase 8.3% to $800m.; and the local technology maintenance sector will rise to $370m., an uptick of 5.1%. Per capita IT spending in Israel, said the IDC report, now stands at $600 - below the $830 per capita in Ireland, $950 in Germany, $1,400 in the UK and the $1,500 per capita in the US and Sweden. Israel spends a significantly greater amount compared to other Middle Eastern countries, however; Jordan the next closest country in terms of IT spending, expends less than $50 per capita on IT. Additionally, local IT spending accounts for 3.2% of the GDP, more than the 3% in Germany, but less than the 3.5% in the US. Over the next five years, IT spending in Israel will grow 6.3% to $2.6b. in the sale of technology for household use; 5.1% to $3.3b. for small businesses; 4.9% to $4.4b. for mid-size businesses; and 3.9% to $12.4b. for large companies. In its world IT outlook report, the IDC predicts that 2008 will be marked by greatly increased investment in emerging markets, the introduction of a slew of new on-line product and service offerings, the opening up of closed business models to communities and new approaches to solutions-oriented packaging. Moreover, the IDC expects there to be heavy investment in disruptive markets, such as on-line delivery, community-based development, solution-oriented packaging, and emerging markets. These disruptions gained momentum in 2007 with the rise of everything-as-a-service, Web 2.0 applications, open development communities, "free IT" funding models, and the emergence of non-traditional competitors like Google, YouTube, and Facebook. "Disruptive technologies have been a persistent theme in IDC's predictions over the past several years," said Frank Gens, senior vice president of research at IDC. "These technologies have been creeping into everything from enterprise software and hardware to consumer gadgets and telecom services, forcing vendors to rethink their offerings. In 2008, the era of experimentation will end as industry leaders get serious about transforming their products and services to take advantage of - and meet the challenges posed by - these new technologies and business models. The status quo is about to change." The IDC predicts that in 2008, worldwide IT spending will grow at a slower pace as economic uncertainties and downside risk will dampen IT spending growth in the US and elsewhere. "As a result," it said, "worldwide IT market growth will be a moderate 5.5-6.0%, down from 6.9% in 2007."