Global IT spending outlook 'better but subpar' for 2014, Forrester says

Growth will pick up even more in 2015, particularly for software, according to a new report

Global spending on technology will rise 6.2 percent in U.S. dollars to US$2.22 trillion in 2014, helped by an improving economy and growing interest in areas such as mobility and cloud computing, according to new data from Forrester Research.

If the prediction bears out, it will be an improvement: IT spending grew only 1.6 percent in U.S. dollars during 2013, according to Forrester analyst Andrew Bartels . Growth will quicken in 2015, rising 8.1 percent in U.S. dollars, but will remain "well below the double-digit growth rates of the late 1990s and 2000 era," Bartels said in a blog post on Thursday.

The U.S. dollar is expected to be weaker compared to many currencies next year, and IT spending will rise only 5.5 percent in local currencies, a percentage point less than previous projections, according to the full Forrester report.

U.S. buyers are setting the pace, being responsible for 40 percent of all tech spending, while the nation's economy has continued to grow "despite self-inflicted wounds from austerity zealots in the U.S. Congress," Bartels wrote on his blog. But economies in Western Europe are only now beginning to recover while Brazil, China, India and Russia "are going through a period of sluggish and uneven growth," he added.

Software will account for the largest share of tech spending in 2014, at $568 billion, followed by IT outsourcing at $442 billion, IT consulting and integration services at $421 billion, computer equipment with $416 billion and communications equipment at $373 billion, according to Forrester's report.

"Software's leading position is not a surprise, because it is the focal point for tech innovation today, whether that innovation takes the form of cloud computing and adoption of software-as-a service (SaaS) and platform-as-a-service (PaaS); smart computing and big data, real-time predictive analytics, and smart process apps; or mobile computing and mobile apps and enterprise app stores," the report states.

IT consulting firms "ride behind software purchases," helping customers implement and use it, the report adds.

Sales of on-premises software licenses have suffered in the weak economy but will rebound next year, particularly in Europe, Asia and smaller markets, according to Forrester.

Although IT outsourcing will be one of the weaker segments next year, it will pick up in 2015, according to the report.

"The shift from weaker to better growth is partly because we are including infrastructure-as-a-service in this category, but mostly because the weak economy of 2013 gave a lift to new outsourcing deals, whose impact on spending will show up in 2015," it states.

Meanwhile, "pent-up demand" for communications equipment due in part to the "burgeoning mobile market" will prompt growth in both 2014 and 2015, according to the report.

Chris Kanaracus covers enterprise software and general technology breaking news for The IDG News Service. Chris' email address is Chris_Kanaracus@idg.com

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Chris Kanaracus

IDG News Service
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