The bankruptcy of Lehman Brothers and acquisition of Merrill Lynch by Bank of America will contribute to a fall of nearly 15% in IT spending by the securities industry in North America next year, according to Tabb Group.
Robert Iati, global head of consulting, Tabb, predicts technology spending will fall from $21.9 billion in 2008 to $17.9 billion in 2009, a 14.7% compound annual growth rate (CAGR) decrease.
He says Lehman’s spending of $2.5 billion will be reduced to approximately $1 billion in 2009, eliminating redundancies with Barclays, which is buying the firm’s key North American businesses.
In addition, Iati says synergy between Merrill Lynch and Band of America will lead to a reduction in technology spend.
It will be difficult to tell how spending on IT will adjust as a result of the recent market activity and news releases in the last week. What I think we’ll see for certain is that there will be a change of funding from investment to maintaining our existing infrastructure; at the same time leveraging new technologies to save money, to improve revenues or for new business requirements.
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