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IT spending to grow 4% in 2021, Gartner forecasts

IT spending to grow 4% in 2021, Gartner forecasts

There has never been a market with this much volatility, says Gartner, which expects 2020 declines in all IT spending segments, including data center systems, IT services, enterprise software and devices.

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Worldwide IT spending is forecast to reach US$3.8 trillion in 2021, an increase of 4% from 2020, according to research firm Gartner, but still shy of pre-pandemic levels. IT spending in 2020 is expected to total US$3.6 trillion, down 5.4% from 2019.

Certain industries facing prolonged lockdowns due to the COVID-19 pandemic, such as entertainment and air transport, have cut IT spending by more than 30% in 2020, according to Gartner, which delivered the current outlook for the global IT market at its virtual IT Symposium/Xpo 2020 Americas.  

Back in May, Gartner's forecast was more dire; the firm had projected IT spending across the globe to total US$3.4 trillion in 2020, a decline of 8% from 2019, due to the impact of the COVID-19 pandemic.

According to the latest forecast, all IT spending segments — including data center systems, IT services, communications services, enterprise software and device spending — are set to decline in 2020. However, enterprise software spending should have the strongest rebound in 2021 with an anticipated gain of 7.2%. That spending will be largely due to enterprise digitalization efforts, the need to increase support for a remote workforce, and the need to deliver virtual services such as distance learning or telehealth, according to Gartner.

"In the 25 years that Gartner has been forecasting IT spending, never has there been a market with this much volatility," said John-David Lovelock, distinguished research vice president at Gartner. "While there have been unique stressors imposed on all industries as the ongoing pandemic unfolds, the enterprises that were already more digital going into the crisis are doing better and will continue to thrive going into 2021."

The spending slowdown that took place from roughly April through August of this year, coupled with cloud service providers' "try before you buy" programs, is shifting cloud revenue out of 2020, Lovelock said.

"Cloud had a proof point this year — it worked throughout the pandemic, it scaled up and it scaled down. This proof point will allow for accelerated penetration of cloud through 2022."

In its top strategic technology trends for 2021 presentation this week, Gartner said the concept of distributed cloud — where cloud services are distributed to different physical locations, but the operation, governance and evolution remain the responsibility of the public cloud provider — will continue to grow. By 2025, most cloud service platforms will provide at least some distributed cloud services that execute at the point of need, the analysts said.

"Companies have more IT to do and less money to do it, so they are pulling money out of the areas they can afford, such as mobile phone and printer refreshes, which is why there will be less growth in the devices and communications services segments," Lovelock stated.

Gartner said that spending on data center systems will experience the second highest level of growth — 5.2% — in 2021 as hyperscalers accelerate global data center buildouts and enterprise organizations resume data center expansion plans and let staff return to work onsite.

In a recent data center spending report, Gartner said spending on global data center infrastructure is projected to reach US$200 billion in 2021. Despite a 10.3% decline in data center spending in 2020 due to restricted cash flow during the pandemic, the data center market is still expected to grow year-over-year through 2024, according to Gartner.  

"The priority for most companies in 2020 is keeping the lights on, so data center growth is generally being pushed back until the market enters the recovery period," said Naveen Mishra, senior research director at Gartner, in a statement. "Gartner expects larger enterprise data centers sites to hit pause temporarily and then resume expansion plans later this year or early next."


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