The latest forecast from the International Data Corporation (IDC) predicts that worldwide spending on information and communications technology (ICT) will reach around $4.3 trillion in 2020. This is an increase of 3.6% from 2019. Commercial and public sector spending on information technology (hardware, software and IT services), telecommunications services, and business services will account for around $2.7 trillion of the total in 2020 with consumer spending making up the rest.
“The slow economy, weak business investment, and uncertain production expectations combined with protectionist policies and geopolitical tensions — including the US-China trade war, threats of US tariffs on EU automobiles and the EU’s expected response, and continued uncertainty around the Brexit deal — are still acting as inhibitors to ICT spending across regions,” said Serena Da Rold, program manager in IDC’s Customer Insights and Analysis group.
“On the upside, our surveys indicate a strong focus on customer experience and on creating innovative products and services driving new ICT investments. Companies and organizations across industries are shifting gears in their digital transformation process, investing in cloud, mobility, the Internet of Things, artificial intelligence, robotics, and increasingly in DevOps and edge computing, to transform their business processes.”
Overall spending on information technology alone will account for over half of all ICT spending in 2020. This will mainly be led by the purchasing of devices and enterprise applications. Although, when put together, the three IT service categories (managed services, project-oriented services, and support services) are expected to deliver more than $750 billion in spending this year as businesses look set to fast-track their efforts for digital transformation. The application development & deployment category will provide the strongest spending growth over the 2019-2023 forecast period with a five-year compound annual growth rate (CAGR) of 11.1%.
Telecommunications services are expected to account for more than a third of all ICT spending this year. Cellular telecom services will be the largest category at over $859 billion, followed by fixed telecom services. Both of these categories will see growth in the low single digits over the aforementioned period. Business service which include key horizontal business process outsourcing and business consulting is expected to account for around half the size of the IT Services market in 2020 with solid growth of 8.2% CAGR predicted for consulting.
Individual consumer ICT Spending will increase although at a much slower rate – 0.7% CAGR. This will result in an eventual loss of share of the five-year forecast period. Consumer spending itself is predicted to be dominated by purchase of mobile telecoms services – mainly data and voice and devices such as smartphones, notebooks, and tablets.
Banking, discrete manufacturing, professional services, and telecommunications are the four main industries that are predicted to deliver 40% of all commercial ICT Spending in the next year. IT services will represent a substantial amount of the spending in all four industries, ranging from 50% in the banking sector to 26% in professional services. This will effect investment priorities as both banking and discrete manufacturing will focus on applications, while telecommunications and professional services will invest in infrastructure. The industries that will deliver the fastest ICT spending growth over the five-year forecast are professional services (7.2% CAGR) and media (6.6% CAGR).
Over half of all commercial ICT spending in 2020 will is expected to come from multi-nationals or large businesses. Small- and medium-sized enterprises will account for nearly 28%. IT services will represent a significant portion of the overall spending for both market sections – 54% for very large businesses and 35% for small and medium businesses. Spending on application and infrastructure will be equal for very large businesses while small and medium businesses will invest more in applications. “SMBs are increasingly embracing digital transformation to take advantage of both the opportunities it presents, and the disruption it can mitigate,” said Shari Lava, research director, Small and Medium Business Markets. “Digitally determined SMBs, defined as those that are making investments in digital transformation related technology, are almost twice as likely to report double-digit revenue growth versus their technology indifferent peers.”