Rise in US dollar pushes global IT spending down

13 July 2015

Global spending on IT is set to fall this year as the US dollar rises, according to analysts.

Gartner predicted worldwide spending on IT will be $3.5 trillion (£2.2 trillion) in 2015, a fall of 5.5 per cent on last year.

However, the Gartner Worldwide IT Spending Forecast said in constant-currency terms, the market is projected to grow 2.5 per cent. In Gartner's previous forecast in April, it forecast IT spending to decline 1.3 per cent in US dollars and grow 3.1 per cent in constant currency. Gartner said it wanted to stress this was not a “market crash”.

“Such are the illusions that large swings in the value of the US dollar versus other currencies can create," said John-David Lovelock, research vice president at Gartner. “However, there are secondary effects to the rising US dollar. Vendors have to raise prices to protect costs and margins of their products, organisations and consumers will have to make new purchase decisions in light of the new prices.”

Communications services will continue to account for the largest IT spend this year, at nearly $1.5 trillion (£0.95 trillion) according to the forecast.

But Gartner said this sector was also experiencing the strongest decline of the five main IT sectors and was forecast to drop by 7.2 per cent. Lower prices and more competition was hindering revenue growth in most national markets, the research firm said.

All other sectors, including devices, data centre systems, enterprise software and IT services were forecast to drop this year, with the enterprise software segment showing the smallest fall of 1.2 per cent.

In the device market, mobile phones continue to be the leading segment, while the PC and tablet markets continue to weaken. In the data centre systems segment, storage and network markets are both expected to see weaker growth in US dollar terms.

Gartner analysts said many software vendors would try not to raise prices because software as a service is about market share, not profitability. It added it expected small increases in spending on consulting in 2015 and next year, as buyers look for help with navigating business and technology complexities. Implementation services spending was set to decline slightly.

Lovelock said that IT activity was stronger than the growth in spending indicated.

“Price declines in major markets like communications and IT services, and switching to 'as a service' delivery, mask the increase in activity,” he said.

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