Despite blowback from a trade war with China and a slowing global economy, business spending on information and communications technologies (ICT) will continue to flourish, according to a report.
The forecast by International Data Corporation (IDC) predicts that worldwide spending on ICT will reach $4.6 trillion by 2022 with an average growth rate of 4% per year. That spending estimate takes place across hardware, software, services and telecommunications verticals, according to IDC.
Commercial customers will account for around 63.5% of the total spending by 2022 ($2.9 trillion), while consumers make up 36.5% ($1.7 trillion), according to IDC.
The fastest growth segment over the forecast period will come from the professional services vertical (7%), including cloud and digital services providers, which will account for a bigger piece of overall tech spending. IDC said the increase in tech spending was largely due to the explosive growth of the cloud infrastructure providers, which include Google Cloud, Microsoft Azure, IBM, and Amazon Web Services.
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The other fastest-growing segments include media (6%), banking (5%), retail (5%), and manufacturing (5%), while the slowest growth in commercial technology budgets will come from the federal government, followed by wholesale and construction firms.
The slowing economy and the trade war between China and the U.S. is putting pressure on companies to increase their technology budgets while also implementing their digital transformations through the use of artificial intelligence and data analytics.
"In the short term, the trade war between the U.S. and China continues to add volatility to the outlook," said Stephen Minton, vice president in IDC's customer insights and analysis group, in a prepared statement. "Some firms are also facing the double whammy of weaker sales in China, an increasingly important export market for the manufacturing industry.
"Meanwhile, the impact in China itself could persist over a longer period of time, with manufacturing and financial services firms being the most exposed."
Despite market maturity, business investments in digital transformation, cloud, and AI will help drive overall U.S. growth of 4.5% over the forecast period, equaling Latin America as the second fastest growing region for total ICT spending behind China.
"In the U.S., the professional services industry is expected to continue with strong technology growth and investments. The appetite for cloud-based delivery, new apps, and tech-fueled services show no signs of slowing, and thus we are optimistic about the growth opportunity for this industry," said Jessica Goepfert, vice president in IDC's customer insights and analysis group, in the statement. "Consumer-driven industries such as retail and hospitality are benefitting from higher wages and disposable incomes.
"In response, firms in this space are working to develop and deliver unforgettable customer interactions. This takes shape as customizable experiences and infusing technology into their operations. For instance, hotels are implementing technology in guest rooms that can be controlled by mobile apps."