Info-tech

Global IT spending may rise 6.2% to $3.7 trillion this year: Gartner

Our Bureau Bengaluru | Updated on April 09, 2018

In what could be some sort of cheer to software services companies, the worldwide IT spending is projected to be $3.7 trillion in 2018.

This is an increase of 6.2 per cent from 2017, according to the latest forecast by research firm Gartner.

This increase in IT spending, among Fortune 500 and other companies has to do with a combination of factors, which include bullishness on global economic growth.

According to Fitch’s latest Global Economic Outlook, the global economy is experiencing boom-like growth conditions and central banks are becoming less cautious as inflation risks rise. The report further added that the US, Euro Zone and China are likely to grow well above trend this year and global economic growth is set to remain above three per cent for three consecutive years until 2019, a performance not achieved since the mid-2000s. Growth in advanced economies is benefiting from declining unemployment, a strengthening investment cycle as business sentiment improves, external demand picks up and labour resources become increasingly scarce.

Brian Coulton, Chief Economist at Fitch, in a report said the acceleration in private investment, pro-cyclical US fiscal easing and global monetary policies are boosting growth in the advanced economies.

This improved business sentiment seems to have trickled down to IT spending, as companies are beginning to realise that they can use technology to gain a competitive advantage and not just look to reduce costs.

John-David Lovelock, Research Vice-President at Gartner, said: “this is the highest annual growth rate that Gartner has forecast since 2007 and would be a sign of a new cycle of IT growth.” IT services, which is now a $167-billion industry, spawning majors such as TCS, Infosys , have seen their growth taper as clients refrained or in some case shifted their spending on technology.

Enterprise software

Enterprise software spending is forecast to experience the highest growth in 2018 with an 11.1 per cent increase, driven by increasing digital adoption. Application software spending is expected to continue to rise through 2019, and infrastructure software will also continue to grow, bolstered by modernization initiatives.

Interestingly, even high commodity prices and the weakening of the dollar, which have impacted recovery in emerging markets has turned out to be advantageous. In 2018 and 2019, the US dollar is expected to be volatile, due to the uncertain political environment, the renegotiation of North American Free Trade Agreement (NAFTA) and the potential for trade wars, like the one US has with China.

Worldwide spending on PCs, tablets and mobile phones is forecast to grow this year, reaching $706 billion, an increase of 6.6 per cent when compared to 2017.

Some in the industry, however, believe that this projection is not of much significance. Peter Schumacher, CEO, Value Leadership Group stated that while a positive demand environment is always good, at this stage what matters more is the strategy and value propositions of the individual companies. As an example, he pointed to Cognizant and TCS who have surpassed their peers.

Published on April 09, 2018

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