Brexit, recession fears to hit global IT spend

Mark Johnson's picture

Worldwide IT spending is projected to total $3.74 trillion in 2019, an increase of 0.6% from 2018, according to the latest forecast by global research group Gartner. 

However, the latest figure is slightly down from the previous quarter’s forecast of 1.1% growth.

Myriad issues in play 

“Despite uncertainty fuelled by recession rumours, Brexit, trade wars and tariffs, we expect IT spending to remain flat in 2019,” said John-David Lovelock, research vice president at Gartner. 

“While there is great variation in growth rates at the country level, virtually all countries tracked by Gartner will see growth in 2019. 

“Despite the ongoing tariff war, North America IT spending is forecast to grow 3.7% in 2019 and IT spending in China is expected to grow 2.8%.”

“Although an economic downturn is not the likely scenario for either 2019 or 2020, the risk is currently high enough to warrant preparation and planning”, said Lovelock. 

Tech spending: Gartner sees slight downward shift

“Technology general managers and product managers should plan out product mix and operational models that will optimally position product portfolios in a downturn should one occur”.

Enterprise software market

The enterprise software market will experience the strongest growth in 2019, reaching $457 billion, up 9% from $419 billion in 2018, Gartner said. 

CIOs are continuing to rebalance their technology portfolios, shifting investments from on-premises to off-premises capabilities, the global consultancy group said.

Cloud goes mainstream 

As cloud becomes increasingly mainstream over the next few years, it will influence ever-greater portions of enterprise IT decisions, in particular system infrastructure. 

Prior to 2018, more of the cloud opportunity had been in application software and business process outsourcing. Over this forecast period it will expand to cover additional application software segments, including office suites, content services and collaboration services. 

“Spending in old technology segments, like data centre, will only continue to be dropped,” said Lovelock.

Consumer spending falls 

Globally, consumer spending as a percentage of total spend is dropping every year in every region due to saturation and commoditisation, especially with PC, laptops and tablet devices. 

Cloud applications allow these devices to have an extended life, with less powerful equipment needed to run new software. This is why the devices market will experience the strongest decline in 2019, down 4.3% to $682 billion in 2019.

“There are hardly any ‘new’ buyers in the devices market, meaning that the market is now being driven by replacements and upgrades,” said Lovelock. 

“Add in their extended lifetimes along with the introduction of smart home technologies and IoT, and consumer technology spending only continues to drop.”

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