Balancing IT Spending with Caution in 2021

Gartner expects 2021 global IT spending to reach $3.9 trillion, a 6.2% increase over 2020, a year marked by uncertainty because of the COVID-19 pandemic. Worldwide IT spending fell 3.2% last year, so the strong 2021 growth outlook is in large part a rebound from a rough year. With governments disrupted, economies halted, and social interactions limited, the IT industry gave the world a way to stay connected last year, so technology that enabled things like remote work and distance learning helped the industry fare better than it otherwise might have.

Investing in digital technologies and services

The unprecedented shift to remote work in 2020 created opportunities as the demand for new digital products and services increased. Those technologies will continue to gain as companies adapt to a hybrid workplace environment, integrating on-site and remote workforces to move businesses forward.

Laptops, tablets, productivity applications, and other related digital products have also benefited from those shifts. Gartner forecasts 8.8% growth enterprise software and 8% in devices in 2021. The data center systems segment follows with 6.2% growth, then IT services (6%) and communications services (4.5%).

Investing in digital workplace technologies—devices, enterprise applications, and data management—will continue to grow in the coming years as more businesses scale up digitalization.

Gartner projects worldwide IT spending related to remote work to grow 4.9% from 2020, to $332.9 billion. 

The availability of the COVID-19 vaccine does not guarantee a quick return to normal. Full recovery may take a couple years for some industries, such as tourism, services, hospitality, and entertainment. Some additional remote work will continue, and there are non-coronavirus related factors at play too.

China-U.S. relations could boost IT market

The new Biden Administration could be a positive for the IT market if it means an end to the Trump Administration’s trade war with China. But the tensions between China and its neighbors—South Korea, Japan, India, and Southeast Asia—will likely mean a continued strong U.S. presence in the region.

Asia is the single biggest market for digital products and services, so some conflict with China’s aggressive policies in the region will likely continue.

Invest with caution 

Governments and businesses are still coping with the impact of the coronavirus pandemic. And the complete implementation of vaccination programs in most countries will probably take another year or two. But the transformation happening in the workplace and learning environments is a bright spot for digital technologies. As companies accelerate digital transformation, the need for new digital products and services will also increase. 

CIOs and CFOs should remain guarded given the uncertain global economic realities. Demand for digital devices, for instance, needs a resilient supply chain, which depends on a stable cross-border business environment.