Where will IT spending flow in 2020?

Where will IT spending flow in 2020?

Enterprise software and IT services are set to surge, but the same can’t be said for the devices market.

Credit: Dreamstime

Players in the IT services space can also expect to see a boost in 2021, with Gartner forecasting a 5.5 per cent year-on-year growth rate, and total spending set to soar to surge to more than US$1.1 trillion. 

Communications services, meanwhile, are tipped to rise by 1.5 per cent in 2020, compared to last year, which actually saw a decrease of -1.1 per cent, year-on-year. This year, communications services spending is expected to reach almost US$1.4 trillion. Next year, it is forecast to break through the US$1.4 trillion mark. 

At the same time, Gartner anticipates the data centre systems market to log a slight, 1.9 per cent increase this year, compared to 2019, with total spending set to rise to US$208 billion. Next year’s growth in the category will be slower, at about 1.5 per cent, according to Gartner, with spending rising more modestly to US$212 billion. 

Although slow, the expected growth for data centre systems spending over this year and the next is better than it was in 2019, which saw a 2.7 per cent year-on-year contraction. 

The laggard of the pack is the devices segment, which is anticipated to experience just 0.8 per cent growth this year, with spending rising incrementally to US$688 billion. 

Last year, the devices segment weathered a 4.3 per cent fall in spending, year-on-year, to US$682 billion. Next year, devices spending is likely to be in negative territory again, at about -0.3 per cent, according to the analyst firm. Spending is expected to fall to US$685 billion. 

While Gartner attributes this year’s anomalous rise in devices spending to the adoption of new, less-expensive phone options from emerging countries, it should be noted that market researchers recently revealed that PC sales grew during the final quarter of 2019, boosting the entire year into the black. Gartner reported that PC sales grew 2.3 per cent for the December quarter, to 70.6 million units, and 261 million units for the year. 

That said, there do appear to be a few forces at work to depress devices spending somewhat, with international currency exchange rates playing a role, with Gartner suggesting that the headwind coming from a strong US dollar has become a deterrent to IT spending on devices and data center equipment in affected countries.

“For example, mobile phone spending in Japan will decline this year due to local average selling prices going up as a result of the US dollar increasing,” Lovelock said. “The UK’s spending on PCs, printers, servers and even external storage systems is expected to decline by 3 per cent, too.”

Despite these headwinds, Lovelock sees a silver lining in macro economic trends that may otherwise be seen as troublesome to the business world and, in turn, IT spending. 

“Although political uncertainties pushed the global economy closer to recession, it did not occur in 2019 and is still not the most likely scenario for 2020 and beyond,” Lovelock said. “With the waning of global uncertainties, businesses are redoubling investments in IT as they anticipate revenue growth, but their spending patterns are continually shifting.”

Article updated to amend the US$3.9 million figure in the first paragraph to US$3.9 trillion.

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