Global spending on IT services will exceed $1 trillion for the first time in 2019, according to a report published this week by Gartner.
Revealed during the annual Gartner Symposium / ITxpo 2018 conference, the latest forecast predicts spending on IT services will grow 4.7 percent on an annual basis to represent well over a quarter of enterprise IT market valued at $3.7 trillion. Overall, Gartner is now forecasting the global enterprise IT market will grow 3.7 percent in 2019.
Gartner says an expected global economic slowdown, coupled with internal pressures to cut spending, is driving organizations to optimize external spend for business services. A recent Gartner study found 46 percent of organizations indicated that IT services was one of the top three most-effective approaches they employ to reduce costs.
IT growth factors
The fastest growing sector of IT remains enterprise software spending. Gartner is forecasting an 8.3 percent increase led mainly by increased adoption of software as a service (SaaS) applications. Overall, Gartner predicts cloud software will grow at more than 22 percent this year compared with 6 percent growth for all other forms of software.
Infrastructure spending, however, will not be nearly as robust. Gartner notes that in 2018, spending on data center systems is expected to grow 6 percent, buoyed by a strong server market that saw spending grow at more than 10 percent over the last year. But starting in 2019, the cloud will take its toll on server spending. In fact, Gartner predicts servers will shift back to a declining market, dropping one to three percent every year for the next five years. Gartner is predicting overall growth in data center systems spending will slow to 1.6 percent in 2019.
Meanwhile, Gartner is predicting worldwide spending for devices is forecast to grow 2.4 percent in 2019, reaching $706 billion, up from $689 billion in 2018. Demand for PCs in the corporate sector is being driven primarily by Windows 10 PC hardware upgrades that Gartner expect to continue until 2020. The only caveat noted by Gartner is a current shortage of CPUs from Intel for the latest generation of PCs.
What it means for MSPs
The Gartner survey makes it clear that now is probably amongst the best of times to be an IT service provider. But there are clearly challenges ahead. Many lower level IT tasks are beginning to be automated. In some cases, the IT service provider is the entity doing the automation. But in a lot of other cases, the task is simply being automated out of existence. IT service providers would be well advised to carefully assess their portfolio of services to make sure they remain relevant.
Of course, not every assessment of the IT market is as rosy as the one provided by Gartner this week. IT services providers need to take any research forecast with a grain of salt. But as IT continues to evolve it’s clear more IT organizations than ever as starting to perceive IT as a set of services to be consumed rather than something they necessarily have to build themselves.
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