Worldwide IT spending to fall in 2015, not rise - Gartner changes its forecasts

Change in IT spending forecast for 2015 attributed to rising dollar - shaving $137bn from global computer industry

Analyst group Gartner has downgraded its forecasts of global IT spending for 2015 from a rise of 2.4 per cent to a drop of 1.3 per cent, attributing the decline largely to the rising value of the dollar.

The changed forecast means that the IT industry will shrink from $3.71tr in 2014 to $3.662tr in 2015 - $137bn less than originally forecast. Gartner, though, attributed the decline to a "currency shock", which is already expected to lead to higher IT prices throughout the industry during 2015 as vendors take stock.

"We forecast US-dollar-valued worldwide IT spending in 2015 to shrink by 1.3 per cent, down from 2.4 per cent growth forecast in last quarter's update," said John-David Lovelock, research vice president at Gartner.

He continued: "This is not a crash, even if it looks like one. The recent rapid rise in the value of the US dollar against most currencies has put a currency shock into the global IT market. Taking out the impact of exchange rate movements, the corresponding constant-currency growth figure is 3.1 per cent, only off 0.6 per cent from last quarter's update. Such are the illusions that large swings in the value of the dollar versus other currencies can create."

Overall, Gartner expects global spending on devices to to decline by 1.2 per cent to $685bn, IT services spending to fall by 0.7 per cent to $942bn, and telecom services to decline by 2.6 per cent to $1,572bn. However, investment in cloud computing means that data centre systems spending will increase marginally to $142bn, while enterprise software sales will rise by 2.3 per cent to $320bn.

Gartner went on to explain some of the reasons for the shifts in spending patterns.

"IT services spending will contract slightly to $942bn in 2015, down from $948bn in 2014. The largest reductions were made in implementation services, particularly in the US. Although the oil and gas industry is only one per cent of the IT services market, oil and gas buyers historically react quickly when their prices drop, often cutting back on spending 20 per cent or more.

"Because the US is a large oil producer and a large market for IT services, the largest spending reductions on services is expected to take place in the US through 2015 and 2016, with an early impact on implementation services."

Spending on software, meanwhile, will largely be affected by falling sales of Microsoft Office, claims Gartner, as organisations shift to a subscription model - typically to Microsoft Office 365.