IT Services Spending to Rise in 2016, Gartner Says

Worldwide spending for IT services is expected to increase 2.1 percent to $929 billion, up from $910 billion last year, according to a new report from Gartner.

The figure means a return to growth for the services category, which was down 4.7 percent in 2015, compared with the previous year.

Overall IT spending – which also includes devices, data center systems, software and communications services – is projected to fall by half a percentage point, to $3.492 trillion, led by declines in spending for devices and communications services.

“There is an undercurrent of economic uncertainty that is driving organizations to tighten their belts, and IT spending is one of the casualties,” said John-David Lovelock, research vice president at Gartner.

But, generally speaking, the report offered a host of good news for managed service providers (MSPs), which stand to benefit from opportunities created as global enterprises undergo continued digitization.

“The need to invest in IT to support digital business is more urgent than ever,” Lovelock said. “Business leaders know that they need to become digital businesses or face irrelevance in a digital world.”

Businesses are using savings from legacy system optimization and enhancements to pay for strategic digital initiatives, Lovelock said.

“It’s about doing more with the same funds,” he said.

“Typically, less than 10 percent of organizations are in cost optimization or cost cutting mode,” Lovelock continued. “However, the need to spend on digital business initiatives in a time when revenue growth does not support runaway IT budgets is forcing more organizations to optimize as a first step.”

The Gartner report noted a growing trend of IT dollars going from purchasing of assets to paying for services.

“Most traditional IT now has a ‘digital service twin’ — license software has cloud software, servers have infrastructure as a service, and cellular voice has VoLTE,” Lovelock said. “Things that once had to be purchased as an asset can now be delivered as a service.”

“Most digital service twin offerings change the spending pattern from a large upfront payment to a smaller reoccurring monthly amount,” he said. “This means that the same level of activity has a very different annual spend.”

The Gartner report adds to rosy projections for future spending on IT services.

Statistics and studies portal Statista published a forecast that estimates global IT services spending will rise to a record $966 billion in 2017.

Find more statistics at Statista

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