The worldwide IT industry will suffer a drop in revenue of 2.3 per cent this year – the largest decline ever – according to IT market researchers IDC.

The researchers predict the total worldwide IT industry revenue this year will contract to $875 billion.

The analysis was taken from research in 43 countries. The news means the IT industry has shrunk by roughly 3 per cent over the past two years, said John Gantz, chief research officer at IDC. This compares with an average annual growth rate of 12 per cent in the IT industry over the past 20 years.

2003 Looking forward to 2003, however, IDC said IT spending is expected to pick up, driving a worldwide growth rate of 5.8 per cent for the industry.

IDC cautioned against unrealistic expectations in specific sectors. Software spending, for example, will remain weak, and price competition will inhibit revenue growth in the hardware sector. Growth of services will be restricted as companies invest in projects that are smaller in scope than in prior years.

IDC also emphasized that significant changes in the economic or geopolitical environment, such as a prolonged war in Iraq or another plunge in the stock market, could result in lower growth rates for IT spending.

Because of the possibility that these events might take place, IDC for the first time produced an alternate "downside" forecast. Under these more negative conditions worldwide IT spending growth next year would be closer to 2 per cent, IDC said.