Tech Spending Stays Steady, Staff Pay Edges Up

Uncertainty about the economy, the war in Iraq, and the possibility of another terrorist attack have U.S. businesses hesitating, which in turn is affecting IT investment. But how significant is the impact of these concerns on technology spending plans and the employees affected by IT budget decisions?

InformationWeek Research's Evolving IT Priorities: 2Q 2003 research brief finds that IT budgets as a percentage of revenue remain stable. On average, the 300 business-technology executives surveyed say that 8.5% of their companies' annual revenue is earmarked for technology purchases in the second quarter of 2003, showing little change from the 8.6% reported in the first quarter.

Staff compensation is showing signs of a possible recovery. After more than 24 months of layoffs and pay freezes, employee compensation as a portion of IT budgets has spiked slightly, with a third of IT budgets being allocated to IT staff salaries and benefits in the second quarter of 2003, compared with 30% in the last quarter and 28% a year earlier.

The only other area of IT spending showing an uptick: applications. In the second quarter of 2003, the costs for developing, maintaining, and purchasing packaged applications account for one-fifth of IT budgets, compared with 18% one year ago. All other budget sectors are down when compared with the second quarter of 2002.

Although increased spending on IT salaries and benefits might be reason to celebrate, only a third of executives interviewed report feeling positive about their near-term prospects based on their employers' IT budgets and spending plans for the next three months. The remaining two-thirds aren't so optimistic.

How is your company's commitment to technology affecting your personal outlook for 2003? Let us know at the address below.

Lisa Smith
Managing Editor, Research
[email protected]