IT spending to decline in 2016; Gartner

Gartner's Worldwide IT Spending forecast analyses technology trends across the industry

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IT spending to decline in 2016; Gartner The Gartner quarterly IT spending forecast delivers a perspective on IT spending across hardware, software, IT services and telecommunications segments
By  Aasha Bodhani Published  April 11, 2016

Analysts at Gartner have predicted worldwide IT spending is forecast to total $3.49 trillion in 2016, resulting in a decline of 0.5% over 2015 spending of $3.5 trillion.

The change is mainly due to currency fluctuations, stated Gartner.

"There is an undercurrent of economic uncertainty that is driving organisations to tighten their belts, and IT spending is one of the casualties," said John-David Lovelock, research vice president at Gartner. "Concurrently, the need to invest in IT to support digital business is more urgent than ever. Business leaders know that they need to become digital businesses or face irrelevance in a digital world. To make that happen, leaders are engaging in tough cost optimisation efforts in some areas to fund digital business in others."

The Gartner Worldwide IT Spending Forecast is an indicator of major technology trends across the hardware, software, IT services and telecom markets. From Gartner's 2016 IT spending forecast, the device market, which includes PCs, mobile phones and tablets, is forecast to decline 3.7% in 2016.

Furthermore, data centre systems spending is projected to reach $175bn in 201, 2.1% increase from 2015. This increase shows enterprise network equipment had a stronger-than-anticipated 2015 as a result of network upgrades, and this is expected to carry on into 2016. The external-controller-based storage segment continues to suffer from ongoing challenges. In the server segment, demand from hyperscale buyers is expected to reduce in 2016, particularly in regions that are suffering from economic challenges, such as Eurasia. The mainframe refresh, which benefited the market in 2015, is expected to abate in 2016, also inhibiting the overall growth figures.

Global enterprise software spending is on pace to total $321bn, a 4.2% increase from 2015. The operating system forecast has been downgraded, reflecting Gartner's expectation for further delays in the adoption of Windows 10 and Windows Server 2016. However, it is the key emerging markets, particularly Latin America, which face escalating political and economic challenges that are responsible for the slow growth. Organisations in those regions must balance cost cutting with growth opportunities during times of economic concern.

Spending in the IT services market is expected to return to growth in 2016, totalling $929bn, up 2.1% from 2015. A stronger outlook for Japan and India is nearly balanced by a weaker outlook in Brazil, China and South Korea, based on challenging economic and political conditions in Brazil; and government actions and weakening economic conditions in China and South Korea.

Telecom service spending is projected to decline 2% in 2016, with spending reaching $1.4 trillion. Continuing economic downturns in major markets such as Russia and Brazil are dampening spending in both fixed and mobile voice, and a slight slowdown in China's growth is affecting consumer confidence and eroding spend in fixed voice services. In enterprise services, conditions in these same three major markets are leading to consolidation among businesses (reducing connections and spend), however, mobile data spending is a bright spot with accelerating growth driven by improved pricing on bandwidth, mobile app and 4G/LTE network availability.

The Gartner quarterly IT spending forecast delivers a perspective on IT spending across hardware, software, IT services and telecommunications segments.

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