IT spending is moving from saturated segments such as mobile phones, PCs and on-premises data center infrastructure to cloud services and Internet of Things (IoT) devices.
Worldwide IT spending is projected to reach $3.76 trillion in 2019, an increase of 3.2 per cent from 2018, according to the latest forecast by Gartner, Inc.
The report also projected that enterprise software will continue to exhibit strong growth, with worldwide software spending anticipated to grow 8.5 per cent in 2019 and another 8.2 per cent in 2020 to reach $466 billion.
Organizations are likely to increase spending on enterprise application software in 2019, with more of the budget shifting to software as a service (SaaS), as per the report.
“Despite uncertainty fuelled by recession rumours, Brexit, and trade wars and tariffs, the likely scenario for IT spending in 2019 is growth,” said John-David Lovelock, research vice president at Gartner.
“IT is no longer just a platform that enables organizations to run their business on. It is becoming the engine that moves the business. As digital business and digital business ecosystems move forward, IT will be the thing that binds the business together,” added Lovelock.
Worldwide IT Spending Forecast (Billions of U.S. Dollars)
| 2018
Spending |
2018
Growth (%) |
2019
Spending |
2019
Growth (%) |
2020 Spending | 2020 Growth (%) | |
| Data Center Systems | 202 | 11.3 | 210 | 4.2 | 202 | -3.9 |
| Enterprise Software | 397 | 9.3 | 431 | 8.5 | 466 | 8.2 |
| Devices | 669 | 0.5 | 679 | 1.6 | 689 | 1.4 |
| IT Services | 983 | 5.6 | 1,030 | 4.7 | 1,079 | 4.8 |
| Communications Services | 1,399 | 1.9 | 1,417 | 1.3 | 1,439 | 1.5 |
| Overall IT | 3,650 | 3.9 | 3,767 | 3.2 | 3,875 | 2.8 |
Source: Gartner (January 2019)
Segments that will be driving growth in the future
According to Lovelock, IT spending is moving from saturated segments such as mobile phones, PCs and on-premises data center infrastructure to cloud services and Internet of Things (IoT) devices.
He explained, “IoT devices, in particular, are starting to pick up the slack from devices. Where the devices segment is saturated, IoT is not.”
Despite a slowdown in the mobile phone market, the devices segment is expected to grow 1.6 per cent in 2019.
The largest and most highly saturated smartphone markets, such as China, Unites States and Western Europe, are driven by replacement cycles.
Last year, the mobile phone market witnessed a decline. Here’s the reason according to Gartner – “With Samsung facing challenges bringing well-differentiated premium smartphones to market and Apple’s high price-to-value benefits for its flagship smartphones, consumers kept their current phones and drove the mobile phone market down 1.2 per cent in 2018.”
IT workforce need to scale up their skills
In addition to changes in buying behaviour, Lovelock said, there is also shortage of skilled internal staff as organizations adopt new technologies, such as IoT devices, to drive digital business.
“Nearly half of the IT workforce is in urgent need of developing skills or competencies to support their digital business initiatives. Skill requirements to keep up, such as artificial intelligence (AI), machine learning, API and services platform design and data science, are changing faster than we’ve ever seen before,” Lovelock noted.
More detailed analysis on the outlook for the IT industry is available in the complimentary webinar “IT Spending Forecast, 4Q18 Update: What Will Make Headlines in 2019?”
