Trade war, slowing economies put pressure on ICT spending outlook

BUSINESS spending on information and communication technologies (ICT) will be caught in the crossfire of headwinds and tailwinds over the next five years as a softening global economy puts pressure on the ability of organisations to increase technology budgets while at the same time their growth and competitiveness is increasingly dependent on digital transformation, artificial intelligence (AI), and data analytics.

A new forecast from International Data Corporation (IDC) predicts worldwide ICT spending on hardware, software, services and telecommunications will reach $4.6 trillion by 2022, representing average growth of four per cent per year. Commercial customers will represent around 63.5 per cent of total spending by 2022 ($2.9 trillion), while consumers will still account for 36.5 per cent ($1.7 trillion).

Consumer spending growth will lag behind business and government spending due to increasing saturation in smartphones and tablets. The fastest growth over the forecast period will come from the pro- fessional services segment (seven per cent), including cloud and digital service providers, which will account for a rapidly increasing share of overall tech spending thanks largely to the explosive growth of cloud infrastructure providers. Other fast-growing segments include media (+6%), banking (+5%), retail (+5%), and manufacturing (+5%), while the slowest growth in commercial technology budgets will come from federal government, followed by wholesale and construction firms.

Vice President in IDC’S Cus- tomer Insights & Analysis Group, Stephen Minton, said in the short term, the trade war between the U.S. and China continues to add volatility to the outlook.

“Some firms are also facing the double whammy of weaker sales in China, an increasingly important export market for the manufacturing industry.

Meanwhile, the impact in China itself could persist over a longer period of time, with manufacturing and financial services firms being the most exposed.” According to IDC, in Asia/pacific, the U.s.-china trade war is a double-edged sword, which presents both challenges and opportunities. It noted that many businesses are increasingly dependent on China for revenue and might be expected to continue their pivot away from the U.S. in trading relationships. On the other hand, the conflict opens up opportunities to increase exports to the U.S. market.

“The trade war undoubtedly presents opportunities for India’s manufacturing sector,” said Ashutosh Bisht, senior research manager for Asia/pacific in IDC’S Customer Insights & Analysis group.