Slowdown in Private Sector Tech Could Be a Warning to Government

Reuters reported Wednesday that even the normally bullish tech sector is bracing for lower-than-expected quarterly earnings reports, causing investors to back off the likes of Microsoft, IBM and Intel.

Here’s the explainer:

Corporate IT budgets have historically proved more resilient to worsening macroeconomic conditions than other kinds of spending, because businesses invest on the assumption that technology boosts productivity and helps save them costs over the long term.

But investors may have misjudged the depth of the European crisis, and with once-reliable-as-clockwork Chinese growth waning, demand in other emerging markets has not picked up enough of the slack.

The scenario in that first paragraph should sound familiar to federal IT watchers. It’s the standard argument for why agency tech shops should be spared from the ugliest parts of sequestration or other plans to massively cut the federal budget.

The second paragraph should offer some pause, though. With the economic future uncertain, it appears businesses are now digging into their IT budgets for savings too. When push comes to shove, agency IT shops may be forced to share some of the burdens of austerity.