IT Spending Will Sustain Growth of More Than 3% Through 2020

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 update to the Worldwide Semiannual IT Spending Guide: Industry and Company Size, 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 and manufacturing. 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.

On a geographic basis, North America 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).

IT spending in the United States is forecast reach nearly $920 billion this year and top the $1 trillion mark in 2020. While IT services such as applications development and deployment and project-oriented services will be the largest category of spending in 2017 ($275 billion), software purchases will experience strong growth (7.9% CAGR) making it the largest category by 2020. Business services will also experience healthy growth over the forecast period (6.0% CAGR) while hardware purchases will be nearly flat (0.5% 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. Spending growth will be evenly spread with the medium (100-499 employees), large (500-999 employees) and very large business categories each seeing a CAGR of 4.3%.