Business News

IDC forecasts global ICT spending to grow 4% per year through 2022

Even if the global economy is “softening” and organizations are experiencing a certain level of pressure in its technology budgets, industry analyst IDC predicts worldwide ICT spending on hardware, software, services, and telecommunications will reach $4.6 trillion by 2022, representing average growth of 4 percent per year. Commercial customers will represent around 63.5 percent of total spending by 2022 ($2.9 trillion), while consumers will still account for 36.5 percent ($1.7 trillion).

The smartphone market is saturated which will contribute to the decline in consumer spending. IDC finds that the industry will see growth in the “professional services segment (7 percent), including cloud and digital service providers, which will account for a rapidly increasing share of overall tech spending thanks largely to the explosive growth of cloud infrastructure providers. Other fast-growing segments include media (+6 percent), banking (+5 percent), retail (+5 percent), and manufacturing (+5 percent), while the slowest growth in commercial technology budgets will come from federal government, followed by wholesale and construction firms.”

“In the short term, the trade war between the US and China continues to add volatility to the outlook,” said Stephen Minton, vice president in IDC’s Customer Insights and Analysis group. “Some firms are also facing the double whammy of weaker sales in China, an increasingly important export market for the manufacturing industry. Meanwhile, the impact in China itself could persist over a longer period of time, with manufacturing and financial services firms being the most exposed.”

In Asia-Pacific, the US-China trade war is a double-edged sword, which presents both challenges and opportunities. Many businesses are increasingly dependent on China for revenue and might be expected to continue their pivot away from the US in trading relationships. On the other hand, the conflict opens up opportunities to increase exports to the US market.

“The trade war undoubtedly presents opportunities for India’s manufacturing sector,” said Ashutosh Bisht, senior research manager for Asia-Pacific in IDC’s Customer Insights and Analysis group. “Many firms in Asia, however, will be forced to try and balance their relationship with both the US and China, and will mostly suffer negatively from any escalation.”

Digital transformation

Countering negative sentiment around the economy in China is increasing demand for ICT solutions related to digital transformation. This is driving major investments by large enterprise and state-owned customers in industries such as retail, manufacturing, healthcare, and financial services, especially around cloud and AI. Digital transformation is also driving technology budgets in Europe.

“Companies in Western Europe are not only looking to embrace new technologies like AI and robotics to improve their business processes, but also adopting more customer-centric approaches to IT spending decisions,” said Andrea Minonne, research analyst for Western Europe in IDC’s Customer Insights and Analysis group. “This is especially true in customer-facing industries like retail, banking, transportation, and telecommunications.”

Professional services industry

Overall growth in Western Europe will slightly lag emerging markets in Asia-Pacific over the forecast period, but the US market is set to post some of the strongest growth rates in spite of its relative maturity. Business investments in digital transformation, cloud, and AI will help drive overall US growth of 4.5 percent over the forecast, equaling Latin America as the second fastest growing region for total ICT spending after China.

“In the US, the professional services industry is expected to continue with strong technology growth and investments. The appetite for cloud-based delivery, new apps, and tech-fueled services show no signs of slowing, and thus we are optimistic about the growth opportunity for this industry,” said Jessica Goepfert, vice president in IDC’s Customer Insights and Analysis group. “Consumer-driven industries such as retail and hospitality are benefitting from higher wages and disposable incomes. In response, firms in this space are working to develop and deliver unforgettable customer interactions. This takes shape as customizable experiences and infusing technology into their operations. For instance, hotels are implementing technology in guest rooms that can be controlled by mobile apps.”

Image by Steve Buissinne/Pixabay

Advertisements

Leave a Reply

Please log in using one of these methods to post your comment:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.