Gartner sees 2.9 percent growth in IT spending in 2017

Spending on software and IT services should help the industry rebound from a lackluster 2016

Worldwide IT spending should rebound in 2017 with a 2.9 percent increase over 2016, after a slight decrease this year, according to Gartner projections.

Spending on software and IT services should drive the 2017 growth in global IT spending to US$3.49 trillion, the market research group said Wednesday. Gartner projects IT spending will drop by 0.3 percent between 2015 and 2016, with the U.K.'s Brexit vote to leave the European Union swinging IT spending from a modest increase to negative numbers.

Driving the spending growth in 2017 will be businesses' efforts to expand, John-David Lovelock, Garter's research vice president, said by email.

"IT is no longer a cost center," he said. "Leading organizations, as well as those that wish to lead, are spending on IT and nurturing their IT investments as the means to grow their business."

Many companies are still looking to cut costs, but in many cases, those savings are being " reinvested into IT to support the corporate movement to digital business," he added.

Gartner expects global software spending to grow 6 percent in 2016 and another 7.2 percent in 2017, to $357 billion. IT services spending is projected to grow 3.9 percent in 2016 and 4.8 percent in 2017, reaching $943 billion.

Offsetting the growth in those areas in 2016 is a 7.5 percent drop in spending on devices and a 1.1 percent drop in communications services. But both segments should return to positive numbers in 2017, with spending on devices rising 0.4 percent to $600 billion, Gartner predicted.

The upcoming U.S. presidential election should have little impact on IT spending, Gartner said. Historical trends have shown that IT spending in the U.S. does not depend on presidential leadership, with changes in interest rates having a larger impact, Lovelock said.

"Typically, there is a slight pause in IT spending leading into the election, and then a relief in spending subsequently," Lovelock said. "Neither candidate should have a significant impact on IT spending."

IT spending across the world in 2017 will vary greatly from region to region, Lovelock said. Spending in emerging Asia Pacific countries, sub-Saharan Africa and greater China should grow by more than 4.5 percent, while IT spending in North America and Latin America will rise by about 2.5 percent.

Regions with growth of 2 percent or less in 2016 include Japan, Western Europe, and Eastern Europe, Gartner predicted.

North America should be a "middle performer," although the software and IT services growth should be strong there, Lovelock noted. That slow growth is "more a reflection on a change in consumption patterns of PC, laptops, and mobile phones, combined with a saturation in telecom provision that has resulted in price reductions, he added.

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