Global IT revenues to grow 3.5% in 2017

Article By : IDC

Worldwide IT spending forecast to sustain growth of 3.3% through 2020, with the U.S. and Canada as largest market for IT products, services.

Worldwide revenues for IT products and services are forecast to reach nearly ₹160.68 lakh crore ($2.4 trillion) in 2017, an increase of 3.5% over 2016. International Data Corporation (IDC) estimates that global IT spending will grow to nearly ₹177.40 lakh crore ($2.65 trillion) in 2020. This represents a compound annual growth rate (CAGR) of 3.3% for the 2015-2020 forecast period.

Manufacturing (discrete and process) runs second in industry spending on IT products and services behind financial services. Together, these industries will generate around 30% of all IT revenues throughout the forecast period as they invest in technology to advance their digital transformation efforts. The telecommunications and professional services industries and the federal/central government are also forecast to be among the largest purchasers of IT products and services. The industries that will see the fastest spending growth over the forecast period will be professional services, healthcare, and banking, which will overtake discrete manufacturing in 2018 to become the second largest industry in terms of overall spending.

Meanwhile, more than 20% of all technology revenues will come from consumer purchases, but consumer spending will be nearly flat throughout the forecast (0.3% CAGR) as priorities shift from devices to software for things such as security, content management, and file sharing.

"Consumer spending on mobile devices and PCs continues to drag on the overall IT industry, but enterprise and public sector spending has shown signs of improvement. Strong pockets of growth have emerged, such as investments by financial services firms and utilities in data analytics software, or IT services spending by telcos and banks. Government spending has stabilised, and shipments of notebooks including Chromebooks posted strong growth in the education market. Double-digit increases in commercial tablet spending will drive a return to growth for the overall tablet market this year, despite ongoing declines in consumer sales. These industry-driven opportunities for IT vendors will continue to emerge, even as the global economy remains volatile," said Stephen Minton, vice president, Customer Insights and Analysis at IDC.

North America dominance

On a geographic basis, North America (the United States and Canada) will be the largest market for IT products and services, generating more than 40% of all revenues throughout the forecast. Western Europe will account for slightly more than 20% of worldwide IT revenues followed by Asia/Pacific (excluding Japan) at slightly less than 20%. The fastest growing regions will be Latin America (5.3% CAGR) followed by Asia/Pacific (excluding Japan) and the United States (each with a 4.0% CAGR).

IT spending in the United States is forecast reach nearly ₹62.56 lakh crore ($920 billion) this year and top the ₹66.95 lakh crore ($1 trillion) mark in 2020. While IT services such as applications development and deployment and project-oriented services will be the largest category of spending in 2017 (₹18.70 lakh crore), software purchases will experience strong growth (7.9% CAGR) making it the largest category by 2020. Business services will also experience healthy growth over the forecast period (6.0% CAGR) while hardware purchases will be nearly flat (0.5% CAGR).

In terms of company size, more than 45% of all IT spending worldwide will come from very large businesses (more than 1,000 employees) while the small office category (businesses with 1-9 employees) will provide roughly one quarter of all IT spending throughout the forecast period. Spending growth will be evenly spread with the medium (100-499 employees), large (500-999 employees) and very large business categories each seeing a CAGR of 4.3%.

“Global SMB software spending will surpass that of hardware in 2018, upending traditional IT spending habits. More mature SMBs already recognize the value of linking software investments to business processes, and by the end of the forecast, we expect most midmarket firms will be on a path to embrace digital transformation," said Christopher Chute, vice president, Customer Insights and Analysis.

"Changing SMB attitudes regarding the importance of technology investment cut across company size and region categories. Small and midsize firms in developing geographies are just as interested in leveraging technology as those in developed regions. This sets the stage for spending growth everywhere, especially in midsize firms," added Raymond Boggs, program vice president, SMB Research.

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