Gartner: Brexit dented IT spending

tech-spending

Driven by growth in software and IT services revenue, worldwide IT spending will reach US$3.5 trillion in 2017, up 2.9% from an estimated US$3.4 trillion, according to the latest forecast by IT research and advisory group Gartner.

The group highlights software and IT services segments as the bright spot for the IT industry. Software spending is projected to grow 6% in 2016, and by a further 7.2% in 2017 to total US$357bn. IT services spending is on pace to grow 3.9% in 2016 to reach US$597bn, and increase 4.8% in 2017 to reach US$943bn.

Worldwide IT Spending Forecast (Billions of US Dollars)

  2016 Spending 2016 Growth (%) 2017 Spending 2017 Growth (%)
Data Centre Systems 173 1.3 177 2.0
Software 333 6.0 357 7.2
Devices 597 -7.5 600 0.4
IT Services 900 3.9 943 4.8
Communications Services 1,384 -1.1 1,410 1.9
Overall IT 3,387 -0.3 3,486 2.9

Source: Gartner (October 2016)

Gartner analysts report interest regarding the impact of the UK’s exit from the European Union (EU) will have on IT investment. “The immediate impact of Brexit has caused modest growth in IT spending to turn negative for 2016,” reports John-David Lovelock, research vice president at Gartner.

“Without the UK, global IT spending growth would have been modestly positive at 0.2% in 2016, but with the UK included, IT spending is expected to decrease 0.3%. The immediate impact of the British pound [GBP] will also cause the IT spending patterns to shift as prices for IT will increase.”

Companies will be monitoring negotiations closely, and there will be some changes in IT investment, the group predicts. For example, in financial services, analysts expect to see some countries in Europe put more investment in IT to offer a more viable option for EU countries than the UK.

“We see software and IT services spending in Germany and France increasing, while UK services stay relatively flat,” said Lovelock. “There are other countries, such as the Netherlands, Luxembourg and Ireland that are also increasing their IT spend to contend as a viable alternative to banks in the UK. We are seeing examples of many banks in talks with these countries to examine the possibility of moving their operations outside of the UK.”

With the US presidential election three weeks away, Gartner analysts do not believe the campaign or its outcome, will affect IT spending trends.

“We have also taken into account the US presidential race, as well as a potential rate cut by the Federal Reserve,” the group reports. “Typically, there is a slight pause in IT spending leading into the election, and then a relief in spending, subsequently.

“However, trends have shown that IT spending in the US is not dependent on presidential leadership, so neither candidate should have a significant impact on IT spending in the near-term.”

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