Companies are spending more on IT this year. Source: Shutterstock

Companies are spending more on IT this year. Source: Shutterstock

Growth in IT spends to surge despite challenges says Gartner

DIGITAL transformation is the key to growth for several businesses. As a result, they’re spending more on IT, now more than ever before.

According to Gartner, worldwide IT spending is projected to total US$3.76 trillion in 2019, an increase of 3.2 percent from 2018.

“Despite uncertainty fueled by recession rumors, Brexit, and trade wars and tariffs, the likely scenario for IT spending in 2019 is growth,” said Gartner VP John-David Lovelock.

According to the team of analysts, there are a lot of dynamic changes happening in regards to which segments will be driving growth in the future.

Spending is moving from saturated segments such as mobile phones, PCs, and on-premises data center infrastructure, to cloud services and internet of things (IoT) devices. In fact, IoT devices starting to pick up the slack from devices.

Statista, for example, suggests that the number of IoT connected devices worldwide was about 23.14 billion in 2018 and by 2020, forecasts that the number will hit 30.73 billion.

“IT is no longer just a platform that enables organizations to run their business on. It is becoming the engine that moves the business. As digital business and digital business ecosystems move forward, IT will be the thing that binds the business together.”

With the shift to cloud, a key driver of IT spending, enterprise software will continue to exhibit strong growth, with worldwide software spending projected to grow 8.5 percent in 2019.

IDC believes enterprise software will grow another 8.2 percent in 2020 to total US$466 billion.

Organizations are also expected to increase spending on enterprise application software in 2019, with more of the budget shifting to software as a service (SaaS).

Statista’s forecasts, for example, show that SaaS revenues for the public cloud are likely to grow to US$205 billion by 2020, a massive uptrend from the 2018 figure of US$136 billion.

Analysts say enterprises looking at tech talent

“In addition to buying behavior changes, we are also seeing skills of internal staff beginning to lag as organizations adopt new technologies, such as IoT devices, to drive digital business.”

According to a recent Korn Ferry study, skilled talent shortages will continue to impede global growth and if not addressed, could have a significant impact on major economies by 2030.

The study says that if businesses don’t work towards fixing the problem, the shortage will create 85.2 million unfilled jobs and nearly US$8.5 trillion in unrealized revenue in the economies analyzed.

“Nearly half of the IT workforce is in urgent need of developing skills or competencies to support their digital business initiatives. Skill requirements to keep up, such as artificial intelligence (AI), machine learning, API and services platform design and data science, are changing faster than we’ve ever seen before.”

In the APAC, it seems as though Australia is one of the markets facing the biggest threat, while India is the only economy with a talent surplus — says Korn Ferry’s data.

In the short run, it’s clear that companies will need to not only spend money and time buying the right software and technology infrastructure to foster their growth, but will also need to upskill/reskill employees and find new talent to support their tech-driven ambitions.