Worldwide revenues for information technology (IT) products and services are forecast to reach nearly $2.4 trillion in 2017, an increase of 3.5% over 2016.
In a newly published study, analyst firm IDC estimates that global IT spending will grow to nearly $2.65 trillion in 2020. This represents a compound annual growth rate (CAGR) of 3.3% for the 2015-2020 forecast period.
Industry spending on IT products and services will continue to be led by financial services (banking, insurance, and securities and investment services) and manufacturing (discrete and process).
Together, these industries will generate around 30% of all IT revenues throughout the forecast period as they invest in technology to advance their digital transformation efforts.
The telecommunications and professional services industries and the federal/central government are also forecast to be among the largest purchasers of IT products and services.
The industries that will see the fastest spending growth over the forecast period will be professional services, healthcare, and banking, which will overtake discrete manufacturing in 2018 to become the second largest industry in terms of overall spending.
Meanwhile, more than 20% of all technology revenues will come from consumer purchases, but consumer spending will be nearly flat throughout the forecast (0.3% CAGR) as priorities shift from devices to software for things such as security, content management, and file sharing.
“Consumer spending on mobile devices and PCs continues to drag on the overall IT industry, but enterprise and public sector spending has shown signs of improvement. Strong pockets of growth have emerged, such as investments by financial services firms and utilities in data analytics software, or IT services spending by telcos and banks,” said Stephen Minton, vice president for customer insights and analysis at IDC.
“Government spending has stabilized, and shipments of notebooks including Chromebooks posted strong growth in the education market. Double-digit increases in commercial tablet spending will drive a return to growth for the overall tablet market this year, despite ongoing declines in consumer sales. These industry-driven opportunities for IT vendors will continue to emerge, even as the global economy remains volatile,” he added.
On a geographic basis, North America (the United States and Canada) will be the largest market for IT products and services, generating more than 40% of all revenues throughout the forecast.
Elsewhere, Western Europe will account for slightly more than 20% of worldwide IT revenues followed by Asia-Pacific (excluding Japan) at slightly less than 20%.
The fastest growing regions will be Latin America (5.3% CAGR) followed by Asia-Pacific (excluding Japan) and the United States (each with a 4.0% CAGR).
In terms of company size, more than 45% of all IT spending worldwide will come from very large businesses (more than 1,000 employees) while the small office category (businesses with 1-9 employees) will provide roughly one quarter of all IT spending throughout the forecast period.
“Global SMB software spending will surpass that of hardware in 2018, upending traditional IT spending habits. More mature SMBs already recognize the value of linking software investments to business processes, and by the end of the forecast, we expect most mid-market firms will be on a path to embrace digital transformation,” said Christopher Chute, vice president for customer insights and analysis at IDC.