IT spending trends to know till 2019 by IDC

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IDC’s IT spending report released today is an eye opener for IT and networking companies such as Cisco, HPE, Oracle, IBM, SAP, Dell, etc.

The interesting news is that the IT spending by enterprises, government, SMBs and others is forecast to grow to more than $2.8 trillion in 2019 from $2.46 trillion in 2015, said IDC.

Earlier, Gartner said IT spending will grow 0.6 percent to $3,536 billion in 2016 against $3,517 billion (-5.8 percent) in 2015.

The IDC report said IT spending in North America — the United States and Canada – will pass the $1 trillion mark in 2017.

Europe, the Middle East, and Africa (EMEA) will be the second largest region for IT spending followed closely by Asia Pacific.

In terms of IT spending, Latin America will be the fastest growing region with a compound annual growth rate (CAGR) of 4.3 percent.

IT spending in North America will grow at 3.8 percent CAGR. Asia Pacific and EMEA will both grow more slowly than the overall market, which is forecast to have a CAGR of 3.3 percent.

“With the economy entering a new and uncertain phase, IT spending will be heavily influenced by economic cycles and wild cards over the next five years,” said Stephen Minton, vice president, Customer Insights and Analysis at IDC.

The largest IT expenditures will be in the discrete manufacturing, banking, and telecom verticals with each delivering more than 8 percent of all spending throughout the forecast period.

These three industries will be followed by process manufacturing, federal/central government, and professional services.

The fastest growing vertical industry over the 2015-2019 forecast period will be healthcare, with a five-year CAGR of 5.5 percent.

Banking and insurance are tied with media and the resource industries for the industries with the second fastest-growing IT spending, each with a five-year CAGR of 4.6 percent.

Over 40 percent of IT spending will come from very large businesses with more than 1,000 employees.

The small office category with the $70-plus million small businesses with 1-9 employees will provide roughly one quarter of all IT spending.

Medium companies with 100-499 employees and large with 500-999 employees will see the fastest growth in IT spending, with CAGRs of 4.4 percent and 4.8 percent, respectively.

Software spending will be the fastest growing technology market segment with a 6.7 percent CAGR, led by healthcare and financial services investments, followed by business services at 6.2 percent with strong spending growth from media and resource industries.

Hardware and IT services spending will grow at rates slower than the overall market.

Within the software segment, applications that facilitate enterprise and IT operations, such as enterprise resource management and operations & manufacturing applications, will receive the greatest share of software spending.

The fastest growing software categories will be network software, collaborative applications, and data access, analytics & delivery applications.

Hardware will remain the largest market segment overall with roughly 40 percent of IT expenditures going to devices, infrastructure, and telecom hardware.

Telecom hardware including smartphones will represent more than half of all hardware spending, while PCs will remain an important category of IT spending despite a five-year CAGR of -1.6 percent.

Spending on enterprise infrastructure will be driven by growth in the server and storage segments with CAGRs of 2.6 percent and 3.2 percent, respectively. Healthcare and telecommunication firms will represent the strongest opportunities here.

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