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Global information technology spending will grow 8.4% to $ 4.1 trillion in 2021, driven in part by companies that are accelerating their digital transformation plans, Gartner said in its latest IT spending forecast.
IT spending will be driven by digital business plans that will be refined and completed in 2021, said Gartner. More digital initiatives are originating from business departments outside of IT, making IT a full participant in delivering business value, said John-David Lovelock, a distinguished vice president for research at Gartner. As a result, Gartner expects to see the source of funding to be charged as either cost of revenue or cost of products sold (CPV).
The funding source shifts “from an overhead that is maintained, monitored and sometimes cut, to what drives revenue,” Lovelock said in the press release.
Overall solid growth
Each category of IT spending is expected to grow positively by 2022, said Gartner. The demand for devices will be the one that grew the most, with 14%, followed by corporate software, with 10.8%. All categories will have solid growth in 2021, as “organizations are focused on providing a more comfortable, innovative and productive environment for their workforce,” said the company.
For example, organizations are focusing on areas such as social software and collaboration platforms and human capital management (HCM) software to improve employee experience and well-being, said Gartner.
Organizations will still focus on cost optimization and other cost-cutting efforts, but the focus on IT spending in 2021 will be on revenue growth because there is more economic certainty, according to the report. “Last year, IT spending took the form of an ‘instinctive’ reaction to enable a remote workforce in a matter of weeks. As hybrid work takes hold, CIOs will focus on spending that enables innovation, not just completing tasks, ”said Lovelock.
Fast recovery is expected
IT spending was hit in 2020, but Gartner estimated that IT spending in almost all sectors of the industry will recover and exceed 2019 levels in the coming years. Some sectors and regions will recover earlier than others, which will result in a “K-shaped economic recovery,” said Gartner in its launch.
From an industry perspective, bank IT and financial services spending will reach 2019 levels as early as 2021. Retail IT and manufacturing spending will recover at a slower pace and will not recover to pre-pandemic levels until around 2023. In an interview with VentureBeat, Lovelock was able to give more details, noting that most sectors would return to 2019 spending levels sometime in 2021. Government IT spending returned to 2019 levels exceptionally early, reaching that brand in mid-2020, said Lovelock VentureBeat. Transport, however, is not expected to really recover until close to 2025.
There are also regional differences. China has already recovered, while Gartner estimates that North America and Western Europe will see IT spending recover by the end of 2021. The Middle East / North Africa also has a faster recovery path, Lovelock said. VentureBeat. There were some variations in Asia, with “mature” Asia / Pacific markets hoping to see their spending reach 2019 levels in early 2021, compared to “emerging” Asia / Pacific markets approaching 2022, Lovelock said. IT spending in Latin America will grow very slowly, with Gartner predicting a recovery around 2024.
The regional recovery is also likely to be influenced by the most dominant type of industry in the region. Countries that may have more manufacturing will lag behind countries that have a mix of industry sectors, Lovelock said.
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