Israel's information technology industry is far from rallying from the worst slump in its history, says the business consultancy

META Group

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META's research chief, Jimmy Schwarzkopf, predicts that computerization costs in Israel will drop 20% this year, compared with 2001, to about $2.3 billion.

In the second quarter, computerization spending will drop 17% compared with the parallel period of 2001, he predicts.

The estimates are based on a study META conducted among 200 data systems managers working for leading organizations in Israel.

Data systems managers expect the slump to grow even worse, Schwarzkopf says, because of the economic recession coupled with the security situation. Governmental budget cuts are also leading to less spending by ministries and the army on new computer systems.

The sour national mood also discourages major companies, such as Osem, Elite, Bezeq or the mobile communications companies from investing in information technology, META found.

Schwarzkopf found that data systems managers plan to spend only 40% of their annual budgets by the end of August, in fear of future budget cuts.