IT Capital Budgets Jump, IT Hiring Lags

IT capital budgets are rising 4% at the median this year, providing a strong indication that large enterprises are beginning to invest in upgrades to systems and infrastructure, the annual Computer Economics IT Spending and Staffing Benchmarks study finds.

But the newly released study by the Irvine, Calif.-based IT research firm also cautions that IT job growth remains soft and IT operational spending growth is lackluster across all organizations. “Until we see more strength among smaller companies, we have to conclude that this year will look much like the last two years: there will be a slow improvement coupled with a lack of sustained hiring,” said Frank Scavo, president of Computer Economics. “We are in the midst of an IT spending recovery, but it will need to become broader and deeper before we see any acceleration.”

On the positive side, the study provides evidence that IT organizations are stepping up investments in capital projects. IT organizations cited upgrading existing systems, becoming more cost-efficient, and developing new systems as their top three priorities. IT executives are also more confident that they will get to spend all of the money in their budgets this year. Only 20% were anticipating not being able spend all of the money in their plans this year, which is down from 31% last year, when the fiscal cliff and sovereign debt crisis prompted a more dour outlook.

Another positive sign is that large organizations are showing relatively strong improvement in IT operational spending. IT operational budgets are up 4.0% at the median for organizations that have IT operating budgets in excess of $20 million. Large organizations are starting hire IT workers in addition to making capital investments. In contrast, organizations with IT operational budgets of less than $5 million plan to boost IT operational spending by only 1.1% and are showing no growth in headcount.

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