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December 1, 2001

Tech Spending Slows On Wall Street

By Greg Bresiger

IT spending, in the wake of the Sept. 11 tragedy, is slowing down on Wall Street.

Technology spending in the securities industry will grow by two percent this year and will be flat in 2002, according to Larry Tabb, vice president of the TowerGroup, the Needham, Mass.-based securities consulting firm.

Tabb's organization is also predicting that technology spending will increase at an annual rate of about eight percent in a four-year period ending in 2004. That's a dramatic reduction from the 1998 to 2000 period when technology spending was growing at a rate of 17.3 percent.

In the wake of the Twin Towers tragedy, TowerGroup officials said firms would spend on rebuilding, but would probably give less priority to technology.

Tabb noted that firms are reevaluating their priorities. Many are moving away from e-commerce and discretionary projects. Firms are now more likely to spend money on enhancing their current infrastructure, Tabb said.

In another sign of the times, Morgan Stanley is dispersing its operations. Many of its 3,700 workers, who had worked in the World Trade Center in trading operations, are going to an office in Midtown, several miles north. Morgan Stanley officials said they didn't want so many of its workers dependent on the same telecommunications and transportation networks.