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ICT Spending Forecast

2018 - 2022 Forecast

Forecast Overview

While traditional ICT spending is forecast to broadly track GDP growth over the next decade, the overall industry will be catapulted back to growth of more than 2 x GDP as new technologies begin to account for a larger share of the market. The emergence of IoT is already contributing to overall market growth, and within 5-10 years new technologies such as robotics and AR/VR will also expand to represent a significant and growing share of total ICT spending.

Forecast Overview

Technology 2016 Spend, $M 2017 Spend, $M 2018 Spend, $M 2019 Spend, $M 2020 Spend, $M 2021 Spend, $M 2022 Spend, $M
Traditional Technologies $3,698,055 $3,857,728 $3,986,997 $4,099,343 $4,211,785 $4,330,101 $4,453,711
New Technologies $611,688 $713,877 $825,978 $961,763 $1,130,615 $1,345,751 $1,601,824

Traditional spending on hardware, software, services and telecom is already a tale of two markets, with declining revenues from legacy categories as businesses and consumers focus all of their ICT spending on a narrow selection of platforms. Over the next 5 years, all growth in traditional tech spending will be driven by just four platforms: cloud, mobile, social and big data/analytics. Meanwhile, cost savings generated by cloud and automation will see more spending diverted towards new technologies such as AI, robotics and AR/VR. Next-gen security related to new technologies will also continue to drive significant growth.

It will take time for some regions to catch up with mature economies when it comes to adoption of some technologies, especially where these are software-driven (e.g. AI) or reliant on legacy infrastructure or inhibited by local factors (e.g. cloud). However, businesses in emerging markets have already moved quickly to focus on rapid adoption of new technologies which deliver rapid return on investment for targeted industrial use cases such as deployment of IoT and robotics solutions by manufacturing firms in China and the rest of Asia. Governments in emerging markets also keen to drive investment in new technologies, leading aggressive smart city initiatives and integrating ICT with economic planning. Over the next 10 years, the gap will begin to narrow.

Traditional Technologies

Forecast Traditional
Technology Spending $M 2017 Spending 2018 Spending 2018 Growth 2019 Spending 2019 Growth
Hardware $996,376 $1,033,759 4% $1,053,959 2%
Software $477,615 $512,537 7% $550,567 7%
Services $971,434 $1,009,573 4% $1,048,654 4%
Telecom $1,412,303 $1,431,128 1% $1,446,164 1%
Traditional ICT $3,857,728 $3,986,997 3% $4,099,343 3%
New Technologies $713,877 $825,978 16% $961,763 16%
Total ICT $4,571,604 $4,812,974 5% $5,061,106 5%

While overall ICT will grow by at least 5% due to double-digit expansion in new technologies, traditional ICT will growth at around the same rate as GDP this year and next. Growth in traditional hardware, software and services will be largely driven by cloud and mobile and will maintain a stable share of overall business and consumer spending. While some categories are declining, businesses continue to leverage traditional technologies as major components of digital strategies.

Traditional software continues to represent a major contribution to productivity and drives much of the economic benefit of ICT spending, while investments in mobile and cloud hardware have created new platforms which will enable the rapid deployment of new software tools and applications. There will continue to be some cannibalisation of traditional IT services (outsourcing, in particular), but cloud and mobile also create opportunities for IT and business services firms as organisations seek help with their migration to new platforms and the integration of new digital strategies with existing operations and metrics. Digital transformation is set to drive a large proportion of growth in the next 5-10 years, which will continue to ensure steady demand for professional services.

New Technologies

Largely due to the rapid growth of IoT in recent years, led by investments in the manufacturing and transportation industries, new technologies are already approaching $1 trillion in annual revenue. Over the next few years, other new categories such as robots/drones and AR/VR headsets in addition to related software and services will see similar growth. This increasing proportion of spending targeted at new categories will drive the overall industry to a new growth surge over the next decade as businesses move beyond prototyping into broader deployments of technologies such as augmented reality viewers and AI-enabled robots.

There is a natural cohesion between the traditional technologies which continue to see growth (cloud, mobile, social and analytics) and new technologies. Cloud and mobile enable rapid deployment and connectivity, while also cutting costs and complexity in legacy operations which allows businesses to focus on new digital innovation. Analytics, social and AI represent traditional IT software applications which leverage new technologies into tangible economic benefits. Meanwhile, there will be increasing crossover in new technologies such as AI with robotics, as end-users deploy new technologies into real-world use cases.

While much of the focus is on new categories within these new market opportunities, there is also an increasing link between traditional technologies and emerging platforms such as IoT and robotics. A growing share of traditional server/storage spend, for example, is now driven by workloads related to the deployment of these new technologies on the back-end; traditional software applications and system infrastructure solutions benefit from the need of organizations to leverage new technologies into cost savings or competitive benefits; and large firms will continue to engage professional services firms with the roll-out of transformative new ICT solutions. The overall impact of new technologies, then, is much bigger than revenues associated with discrete categories such as IoT sensors, 3D printers or drones.

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