Friday, September 24, 2021

IT Spending to Grow 8.6% in 2021

STAMFORD, Conn. — Global spending on IT is projected to reach $4.2 trillion in 2021 — an 8.6% increase from 2020.

The forecast was made by the market research firm Gartner last month.

IT spending is accelerating ahead of revenue expectations, despite many companies still suffering revenue declines, according to Gartner.

Boards and CEOs are “much more willing” to invest in technology that has a clear tie to business outcomes and “less so” for everything else.

The IT services segment, for example, is projected to grow 9.8% in 2021, due primarily to an increase in infrastructure-as-a-service (IaaS) spending that supports mission-critical workloads and avoids high on-premises costs.

“Technology spending is entering a new build budget phase,” said John-David Lovelock, distinguished research VP, Gartner. 

“CIOs are looking for partners who can think past the digital sprints of 2020 and be more intentional in their digital transformation efforts in 2021. This means building technologies and services that don’t yet exist and further differentiating their organization in an already crowded market.”

“Worldwide IT Spending Forecast”
(Millions of U.S. dollars)

  2020 Spending 2020 Growth (%)   2021 Spending 2021 Growth (%)   2022 Spending 2022 Growth (%)  
Data Center Systems 178,466 2.5 191,648 7.4 201,659 5.2
Enterprise Software 529,028 9.1 598,957 13.2 669,114 11.7
Devices 696,990 -1.5 793,973 13.9 800,172 0.8
IT Services 1,071,281 1.7 1,176,676 9.8 1,277,228 8.5
Communications Services 1,396,287 -1.4 1,444,980 3.5 1,481,878 2.6
Overall IT 3,872,052 0.9 4,206,234 8.6 4,430,051 5.3

Source: Gartner (July 2021).

“Digital transformation can no longer be purchased overnight, and global IT spending projections reflect that,” Lovelock said. 

“As the world continues to open back up, enterprises will invest in tools that support innovation, anywhere operations, and employee productivity and trust.”

See more: CFOs Committing to Digital in 2021

Methodology

The Gartner IT spending forecast offers perspective on IT spending across the hardware, software, IT services, and telecommunications segments. 

The forecast “relies heavily” on the analysis of sales by thousands of vendors across a range of IT products and services. 

Gartner uses primary research techniques and secondary research sources to build a database of market size data as the basis of its forecast.

Industry growth drivers

The increase in information technology spending in 2021 is due partly to surging demand for devices for remote employees during the COVID-19 pandemic, according to a post last month by Statista.

IT services and communication services, the two largest IT sectors, include offerings — such as unified communications for connecting employees and business productivity — that “remain cornerstones to different business functions,” Statista says.

The increase in spending across IT segments will accelerate components of “digital transformation,” such as artificial intelligence (AI), process automation, and migrating data to the cloud, across industries.

Global economic growth

IT spending is being supported by a growing global economy, which is expected to expand 5.6% in 2021, mostly on rebounds by a few major economies, according to The World Bank in June.

The U.S. economy, the largest buyer of information technology, is projected to grow 6.8% this year, The World Bank says.

With a release of “pent-up demand,” China’s economy should grow 8.5% this year.

See more: Data Transformation Trends 2021

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