IT spending in Europe and worldwide seen coming out of slump in 2020 as currency pressure eases – and firms rush to buy into the cloud
IT spending in Europe, the Middle East and Africa may return to growth next year, driven by enterprise software growth and the cloud, Gartner has predicted.
The analyst firm said it sees EMEA IT spending hitting $798 billion (£620bn) in 2020, up 3.4 percent on 2019, ending a three-year slump.
Enterprise software and cloud spending in particular are seen as driving growth, with software-as-a-service (SaaS) seen as growing 17.7 percent in the region in 2020.
Spending on devices, including PCs, tablets and mobile phones, is set to decline more than 10 percent this year and to fall a more modest 1.3 percent next year, Gartner said.
Research vice president John-David Lovelock said declines in the euro and the British pound against the US dollar, partially due to Brexit concerns, have pushed some IT spending down and caused a rise in local prices for technology hardware.
But he said Gartner sees pressure on currency rates being relieved next year, helping push a rebound.
“The slowdown in IT spending in 2019 is not expected to stretch as far into 2020 despite concerns over a recession and companies cutting back on discretionary IT spending,” Lovelock said.
Worldwide, Gartner sees IT spending rising only 0.4 percent to $3.7tn this year, but rising by 3.7 percent in 2020.
Gartner said it sees cloud spending as key for companies that want to attain a position of digital leadership in the future.
The firm expects cloud services to account for 14 percent of all US IT spending by 2022, and it sees IT spending in EMEA and worldwide is being driven by countries catching up to those levels.
The UK is second to the US on cloud spending, with 8 percent of IT spending going toward cloud services, expected to reach 11.5 percent by 2022.
The Netherlands is in a similar position and is also expected to reach the 11.5 percent mark by 2022.
China shows the highest rate of growth on cloud spending, with a compounded growth rate of 34.8% through 2022, but is still seen as lagging the US by four years or more.
Regulatory compliance is seen as a top priority for many EMEA organisations, with spending on security set to rise 8.9 percent next year in the region.
Worldwide, security and compliance spending is being driven in part by the increasingly complex geopolitical environment, Lovelock said.
“This is not just about keeping the ‘bad guys’ out,” he said. “It is also about the expanding need to be compliant with tariffs and trade policy, intellectual property rights, and even with the multiple and sometimes overlapping privacy laws.”
Gartner’s optimism on EMEA IT spending contrasts with a warning by the European Commission last week that the EU appeared to be heading into a “protracted period of more subdued growth”.
The Commission said trade conflicts, geopolitical tensions, a weak manufacturing sector and the UK’s exit from the EU contributed to expected stagnation.