Driven by growth in software and IT services revenue, worldwide IT spending is forecast to reach $3.5 trillion in 2017, up 2.9 percent from 2016 estimated spending of $3.4 trillion, according to the latest forecast by Gartner, Inc.
The bright spot for the IT industry has been the software and IT services segments. Software spending is projected to grow 6 percent in 2016, and it will grow another 7.2 percent in 2017 to total $357 billion (see Table 1). IT services spending is on pace to grow 3.9 percent in 2016 to reach $597 billion, and increase 4.8 percent in 2017 to reach $943 billion.
Table 1. Worldwide IT Spending Forecast (Billions of U.S. Dollars)
|2016 Spending||2016 Growth (%)||2017 Spending||2017 Growth (%)|
|Data Center Systems||173||1.3||177||2.0|
Source: Gartner (October 2016)
Gartner analysts are discussing the key IT and business issues that are driving the evolution of digital business this week during Gartner Symposium/ITxpo here through Thursday. There has been interest among attendees regarding the impact of the U.K.’s exit from the European Union, known as Brexit, will have on IT investment.
“The immediate impact of Brexit has caused modest growth in IT spending to turn negative for 2016,” said John-David Lovelock, research vice president at Gartner. “Without the U.K., global IT spending growth would have been modestly positive at 0.2 percent in 2016, but with the U.K. included, IT spending is expected to decrease 0.3 percent. The immediate impact of the British pound will also cause the IT spending patterns to shift as prices for IT will increase.”
Companies will be monitoring negotiations closely, and there will be some changes in IT investment. For example, in financial services, analysts expect to see some countries in Europe put more investment in IT to offer a more viable option for EU countries than the U.K.
“We see software and IT services spending in Germany and France increasing, while U.K. services stay relatively flat,” Mr. Lovelock said. “There are other countries, such as the Netherlands, Luxembourg and Ireland that are also increasing their IT spend to contend as a viable alternative to banks in the U.K. We are seeing examples of many banks in talks with these countries to examine the possibility of moving their operations outside of the U.K.”
With the U.S. presidential election three weeks away, Gartner analysts do not believe the pending election, or the winning candidate, will effect IT spending trends.
“We have also taken into account the U.S. presidential race, as well as a potential rate cut by the Federal Reserve. Typically, there is a slight pause in IT spending leading into the election, and then a relief in spending, subsequently. However, trends have shown that IT spending in the U.S. is not dependent on presidential leadership, so neither candidate should have a significant impact on IT spending in the near-term.”
More detailed analysis on the outlook for the IT industry is available in the complimentary webinar on demand, “IT Spending Forecast, 3Q16 Update: Impacts of Brexit Not Limited to the U.K.” During the webinar, Gartner analysts discuss the direct and harmful effects of Brexit is having on global IT spending.
Gartner’s IT spending forecast methodology relies heavily on rigorous analysis of sales by thousands of vendors across the entire range of IT products and services. Gartner uses primary research techniques, complemented by secondary research sources, to build a comprehensive database of market size data on which to base its forecast.
The Gartner quarterly IT spending forecast delivers a unique perspective on IT spending across hardware, software, IT services and telecommunications segments. These reports help Gartner clients understand market opportunities and challenges. The most recent IT spending forecast research is available at “Gartner Worldwide Spending Forecast.”