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Tech Spending in 2019 to Sink Drastically – Here is the Reason Why?

Global Tech

Global tech consulting firm Gartner said the overall growth rate for technology spending at $3.79 trillion will be just 1.1% in 2019 or a fourth of what the industry witnessed in 2018 when it was 4%.

In studies in January 2019 and October 2018, Gartner had projected global tech spending to grow at 3.2%.

No matter what digital transformation has kept on deck to outflow expenditure expected in the tech industry. 2019 seems to be surrender to all the gossips, as, the growth rate in tech spending for 2019 will shrink drastically from what was seen in 2018 due to weakening global economies and currency volatilities.

Worse still, growth of IT services — a revenue stream key to Indian tech companies — will be muted at 3.5%, down from the brisk 5.5% registered last year.

Except enterprise software market, where spending is expected to rise 7%, budgets in data centre systems, IT devices and others are all set to decline in 2019, the report finds.

“Currency headwinds fuelled by the strengthening US dollar have caused us to revise our 2019 IT spending forecast down from the previous quarter,” Gartner VP (research) John-David Lovelock said. “Through the remainder of 2019, the US dollar is expected to trend stronger, while enduring tremendous volatility due to uncertain economic and political environments and trade wars.”

According to Indian tech industry body Nasscom, the sector crossed $165 billion in revenues and marginally grew above their own guidance of 7-9%.

Nasscom is doing away with the system of offering growth outlook from 2019 onwards.

Announcing their performance in the March quarter, Indian IT majors TCS, Infosys and Wipro have all guided for slower-than-expected revenue growth for the coming fiscal year.

While TCS does not offer specific forecast numbers, Infosys has an outlook of 7.5-9.5% constant currency growth in FY20, and the company also slashed margin expectations to 21-23%.

Gartner cautions technology managers to get more strategic with their portfolio in 2019. There is a need to balance well-performing growth-oriented segments and markets with those that may tend to trend either flat or down, Lovelock said.

Global market research company Forrester Research too anticipates global economic trends to play spoilsport for tech market’s growth, expecting it to slow from 5% in 2018 to 3.8% by 2020.

“Western and Central Europe — spending $949 billion in 2019 — will remain the second-largest regional tech market, but one of the slowest growing at 0.1%,” Forrester said in a recent report.

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Niloy Banerjee

A generic movie-buff, passionate and professional with print journalism, serving editorial verticals on Technical and B2B segments, crude rover and writer on business happenings, spare time playing physical and digital forms of games; a love with philosophy is perennial as trying to archive pebbles from the ocean of literature. Lastly, a connoisseur in making and eating palatable cuisines.

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