Worldwide IT spending to reach $2.7tn: IDC

Worldwide revenues for information technology (IT) products and services will grow from nearly $2.4 trillion in 2016 to more than $2.7 trillion in 2020 as per IDC.

IT products and services will grow at a compound annual growth rate (CAGR) of 3.3 per cent for the 2015-2020 forecast period.

The telecommunications industry is forecast to remain relatively sluggish, although spending levels are expected to gradually improve compared to the past several years.

Four industries (banking, discrete manufacturing, process manufacturing and telecommunications, which are also the industries with the largest IT expenditures) will generate nearly a third of worldwide IT revenues throughout the forecast.

Consumer purchases accounted for nearly a quarter of all IT revenues in 2015, thanks to the ongoing smartphone explosion. But consumer spending for PCs, tablets, and smartphones has been weakening, which will have a dampening effect on the IT market overall. Looking ahead, even the moderate growth forecast for the tablet market will be driven by commercial segments rather than consumer tablet sales.

"While the consumer and public sectors have dragged on overall IT spending so far in 2016, we see stronger momentum in other key industries including financial services and manufacturing," said Stephen Minton, vice president, Customer Insights and Analysis, IDC.

"Enterprise investment in new project-based initiatives, including data analytics and collaborative applications, remains strong and mid-sized companies have been especially nimble when it comes to rapidly adopting 3rd Platform technologies and solutions. Assuming the economy remains stable in 2017, smaller businesses will also begin to climb aboard the 3rd Platform in greater numbers," added Minton.

Healthcare will remain the fastest growing industry with a five-year CAGR of 5.7 per cent despite concerns that spending growth may have peaked. Banking, media, and professional services will also experience solid growth with CAGRs of 4.9 per cent and combined revenues of more than $475 billion in 2020.

Gradual improvement is expected in the public sector, although government purchases of technology will continue to lag behind much of the private sector. Similarly, IT expenditures in the natural resources industry are forecast to recover as the price of oil rebounds from recent lows.

"In the US, the greatest near-term growth is expected among healthcare providers, professional services firms, banks and securities and investment services organizations," said Jessica Goepfert, program director, Customer Insights and Analysis, IDC.

"These service-based organizations are turning to 3rd Platform technologies like mobility and big data to enable more productive and meaningful ways to engage with clients. In addition to these customer-centric priorities, businesses operating in regulated environments are also turning to technology to assist with compliance," added Goepfert.

In terms of company size, more than 45 per cent of all IT spending worldwide will come from very large businesses (more than 1,000 employees) while the small office category (the 70-plus million small businesses with 1-9 employees) will provide roughly one quarter of all IT spending throughout the forecast period. Medium (100-499 employees) and large (500-999 employees) business will see the fastest growth in IT spending, each with a CAGR of 4.4 per cent.