Earlier this year, global research firm Forrester alluded to tougher times ahead for IT spends as it moves away from 2018’s peak growth rates.
The Information Technology (IT) sector is bearing the brunt of the global downturn with guidance to ‘industry spends’ growth getting lowered to 0.6% from 3.2% in January, as per the latest Gartner estimates. Overall IT spending recorded a growth of 5% in 2018, and 3.8% in 2017.
“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 [by technology managers],” John-David Lovelock, research VP at Gartner, wrote in the note.
He advised tech executives to plan product mix and operational models, if a downturn should occur.
A saturated devices market, especially when it comes to PCs, laptops and tablets, and increasing commoditization of tech industry with emergence of cloud, is contributing to declining IT spends.
Among categories, Gartner’s analysis pegs the devices market to experience the strongest decline in 2019 falling 4.3% from 2018 (6% growth). IT Services, the key segment for Indian IT giants, is projected to grow at 3.8% in 2019, compared to 6.7% growth it recorded in 2018. The enterprise software market is expected to continue its momentum, reaching $457 billion, up 9% from $419 billion in 2018.
Earlier this year, global research firm Forrester alluded to tougher times ahead for IT spends as it moves away from 2018’s peak growth rates. “In 2019, Forrester expects to see less digital transformation exuberance and more pragmatic investments aimed at improving operational efficiency and agility,” it said.
As per Gartner, North American IT spending will grow 3.7% and tech spending in China is expected to rise 2.8%. Neha Gupta, senior analyst, Gartner told TOI investment in digital transformation and IoT will fuel growth in IT spending in India, estimating spends at $52 billion in 2019- a 4.6% growth over 2018.
“Also, need for analytics capabilities and artificial intelligence in customer-facing operations will be strong drivers of this growth,” she added. Reporting its June quarter results on Tuesday, Indian tech major TCS admitted to a soft start but is not adjusting outlook for a double-digit growth for the fiscal yet.
“There are hardly any ‘new’ buyers in the devices market, meaning that the market is now being driven by replacements and upgrades,” Lovelock said. When you factor in the extended lifetimes of the devices along with upgrades to new-age tech, spending by consumer continues to drop, he added.