U.S. IT Spending to See Steady Growth in 2016 Despite Worldwide Slump

IT spending in the United States will be stable in 2016, experiencing mild growth on par with previous years, according to a new forecast by market research firm IDC.

The forecast calls for a slowdown in worldwide IT spending. However, despite the global slump — enabled in part through a slowdown in PC sales — IT spending in the United States will climb 4 percent during the year, the same rate of growth seen in the previous three years.

Barring any disruptions to the larger economy, this 4 percent growth trend is expected to continue into 2017 as well, IDC noted.

According to IDC's Worldwide Black Book, "Total IT spending on hardware, software and services will reach $2.3 trillion in 2016. Including telecom services, total ICT spending will increase by 2 percent to $3.8 trillion." IDC's research does not break down spending by sector but focuses on IT expenditures worldwide across all industries.

"IT spending was relatively stable in 2015, in spite of the volatile economy, propelled by another strong year for smart phone shipments, which compensated for a weakening PC market throughout the year," according to IDC. "Smart phones accounted for half of the overall industry growth rate of 6 percent in 2015. Spending on cloud infrastructure was also strong throughout the year, resulting in growth of 16 percent for the server market and 10 percent for storage systems. Enterprise spending on software, including SaaS, posted healthy growth of 7 percent with strong investment in analytics, security, and collaborative applications. However, the strong U.S. dollar made 2015 an uncomfortable year for U.S.-based IT companies. In U.S. dollar terms, the overall IT market declined by 2 percent last year, and exchange rate volatility remains a wild card which could influence the fortunes of IT suppliers over the next 12 months."

"Aside from exchange rate volatility, IT spending has been relatively stable for the past five years," said Stephen Minton, vice president with IDC's Customer Insights and Analysis group. "Excluding mobile phones, overall tech spending has continued to grow at 3 percent to 4 percent each year in constant currency terms since we recovered from the disruption of the financial crisis. A solid PC upgrade cycle in 2014 was followed by a major cycle of infrastructure spending in 2015, mostly driven by cloud. IT buyers continue to prioritize software investments like data analytics and enterprise mobility, and have increasingly leveraged the service provider model in order to increase the effectiveness of their IT budgets. Underlying buyer sentiment is strong."

About the Author

David Nagel is the former editorial director of 1105 Media's Education Group and editor-in-chief of THE Journal, STEAM Universe, and Spaces4Learning. A 30-year publishing veteran, Nagel has led or contributed to dozens of technology, art, marketing, media, and business publications.

He can be reached at [email protected]. You can also connect with him on LinkedIn at https://www.linkedin.com/in/davidrnagel/ .


Featured

  • stylized illustration of a global AI treaty signing, featuring diverse human figures seated around a round table

    World Leaders Sign First Global AI Treaty

    The United States, the United Kingdom, the European Union, and several other countries have signed "The Framework Convention on Artificial Intelligence, Human Rights, Democracy, and the Rule of Law," the world's first legally binding treaty aimed at regulating the use of artificial intelligence (AI).

  • file folders floating in the clouds, with glowing AI circuitry and data lines intertwined

    OneDrive Update Adds AI Agents, Copilot Interactions

    Microsoft has announced new enterprise capabilities in its OneDrive cloud storage service, many of which leverage the company's Copilot AI technologies.

  • happy woman sitting in front of computer

    Delightful Progress: Kuali's Legacy of Community and Leadership

    CEO Joel Dehlin updates us on Kuali today, and how it has thrived as a software company that succeeds in the tech marketplace while maintaining the community values envisioned in higher education years ago.

  • close-up illustration of a hand signing a legislative document

    California Passes AI Safety Legislation, Awaits Governor's Signature

    California lawmakers have overwhelmingly approved a bill that would impose new restrictions on AI technologies, potentially setting a national precedent for regulating the rapidly evolving field. The legislation, known as S.B. 1047, now heads to Governor Gavin Newsom's desk. He has until the end of September to decide whether to sign it into law.