Global IT spending is projected to be $3.5 trillion by year’s end which is a slide to 5.5 percent from $3.7 trillion last year, Gartner reports. This a more bigger downfall than last year, with Gartner publishing a report in April reckoning spending to decline by 1.3 percent in 2015.
The research firm highlights that this forecast does not signal “a market crash” and points to the strengthening of the U.S. dollar comparative to other foreign currencies as the largest reason for the down spending numbers.
When put into terms of constant-currency, Gartner said the market is actually projected to grow by 2.5 percent but that many segments are being affected by the U.S. dollar, causing adjustments in business. Some vendors are forced to raise prices to protect their costs and margins, which can often lead to customers altering their spending.
John Landy, CTO of Datapipe, global managed services provider based in Jersey City, N.J., said he sees business expanding, not shrinking. Datapipe, which deals primarily in data center services and cloud offerings, is seeing increased business driven by public cloud, the CTO said.
“What we’re seeing is still an increase in demand across all segments, especially large enterprise,” Landy said.
Landy further added, ‘That’s mainly because of the innovation that’s out there. The public cloud space is driving need for a cloud strategy. I think that’s across the spectrum.’
“Overall the estimates on the IT spend could be down year over year, but we’re seeing a refocus on some of those dollars, and that is basically causing a yearly skew [in spending],” Landy said. “Plus, there [are] dollar conversion rate changes that might impact some of the spending on pure physical IT. From a business perspective, we’re seeing increased demands in respect to the Infrastructure-as-a-Service layer, and that’s maybe causing a shift in how IT is spending some of those dollars.
“But still, business is expanding across that scope,” Landy said. ‘I think if you look at the IT hardware space, business would be expanding too because of a lot of hyper-scale services and data center getting out there.’ Gartner forecasts spending in data center systems to dip by 3.8 percent worldwide from $142 billion in 2014 to $136 billion this year. IT services spending is predicted to drop by 4.3 percent, Gartner said, from $955 billion to $914 billion. The research firm also predicted a decline in in the devices market, which is projected to drop by 5.7 percent year over year from $693 billion last year to $654 million this year. Enterprise software is expected to see the smallest decline of 1.2 percent from $314 billion in 2014 to $310 billion this year, according to Gartner.