Gartner cuts 2014 global IT spending forecast

Estimate cut on expectation of lower growth in telecom segment

Research firm Gartner on Monday cut its forecast for global spending on information technology (IT) in 2014 to 3.1 per cent at $3.8 trillion, as against 3.6 per cent growth estimated earlier, mainly on account of lower growth seen in telecommunications segment. In 2013, worldwide IT spending grew a tepid 0.4 per cent, according to Gartner.

“A downward revision of the 2014 forecast growth in spending for telecom services – a segment that accounts for more than 40 per cent of total IT spending – from 1.9 per cent to 1.2 per cent is the main reason behind this overall IT spending growth reduction,” said Richard Gordon, managing vice-president at Gartner.

“A number of factors are involved, including the faster-than-expected growth of wireless-only households, declining voice rates in China and a more frugal usage pattern among European customers. The latter coincides in western Europe with a breakout of fierce price competition among communications service providers to retain customers and attract new ones."

In 2013, worldwide IT spending grew a tepid 0.4 per cent, according to Gartner.

Gartner also cut the data center system spending growth estimate for 2014 to 2.6 per cent from 2.9 per cent earlier. “This is mainly due to a reduction in the forecast for external controller-based storage and enterprise communications applications. These segments represent 32 per cent of total data center system end-user spending,” the firm said.

Spending on enterprise software will continue to be strongest in 2014 at an estimated 6.8 per cent, while spending on devices, including PCs, mobile phones and tablets, is likely to increase 4.3 per cent in 2014, as against a contraction of 1.2 per cent in 2013.

The research firm has also slightly reduced the compounded annual growth rate for IT services between 2012 and 2017, it said, without sharing further details on the same.

“The largest contributor to this revision comes from reductions in IT outsourcing – specifically, in co-location, hosting and data center outsourcing growth rates,” Gordon said. “We are seeing CIOs increasingly reconsidering data center build-out and instead planning faster-than-expected moves to cloud computing. Despite these small reductions, we continue to anticipate consistent four to five per cent annual growth through 2017.”