News

Cloud Drives U.S. Enterprise IT Spending amid Worldwide Slump

• By David Nagel
• 02/26/2016

Research firm IDC forecasts that, in the midst of a global downturn, IT spending in the U.S will hold steady this year.

IDC sees a worldwide IT spending slowdown driven partly by a slump in PC sales, while U.S. spending is partly buoyed by cloud infrastructure expenditures.

IT spending in the U.S will climb 4 percent during the year, the same rate of growth seen in the previous three years, the research firm said.

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."