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Study: IT spending to slow

Erich Luening, CNet News CNet

Published: 21 Dec 2000 12:40 GMT

Large companies will scale back their IT spending as the new year begins and the economy shows signs of waning, according to a new study.

Morgan Stanley Dean Witter Wednesday released its annual year-end survey of chief technology officers at 150 of the Fortune 1000 companies. The survey shows that budgets will grow just 8 percent in 2001, compared with this year's 12 percent increase. The survey also showed that 16 percent of the respondents will actually spend less in 2001 than they did this year.

Since August, the robust IT industry has grown weaker due to a slowdown in demand for PCs and other high-tech gear. Consumer markets were first blamed for the shortfall. But in recent weeks, a number of companies, including Compaq Computer, have warned that corporate buying has slowed.

Last week, software giant Microsoft also issued a profit warning for the first time in a decade.

The survey found that spending on mainframe technology and consulting services will decrease the most in the coming year. Many companies bulked up on mainframes during the Y2K scare, which cut mainframe sales in 2000.

Meanwhile, the top three categories in which buying will likely increase are database software, marketplace software and e-commerce software.

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