Infoconomy Index: Downward spiral.

The recession gripping the IT industry continues to bite. The Infoconomy Index - which tracks the overall growth rate at the sector's 200 largest companies - slumped to -10.3% in November, down from -7.4% in October. The latest figures represent a whopping 25% drop in business since November 2000, when the growth rate was running at 15.1%

Systems vendors were major contributors to the downward trend. Hewlett-Packard's latest quarterly revenues slumped 18%; IBM's figures fell 6%; and sales at Dell Computer were off 10% compared to the same three months a year ago.

The gloom enveloping the PC market was reaffirmed by a 25% fall in quarterly revenues at semiconductor giant Intel. And with results compounded by problems in the telecoms sector, sales at networking equipment specialist Cisco were even worse, down 32%.

More upbeat news was delivered by the large vendors in the IT services sector. Computer Sciences was able to show revenue growth of 11%; WM-data Nordic's sales were up 11%; quarterly revenues at newly-floated Accenture also rose by 11%; and CMG's figures shot up by 31%. However, these rises do not necessarily indicate a growth in spending on technology; in many cases, the growth flows from IT outsourcing contracts that simply shift existing resources to service providers.

However, even though the latest index figure of -10% is the worst the IT sector has seen, the downwards trend looks set to continue to the end of 2001 and into the first quarter of 2002.