Strong U.S. Dollar To Slow Down Global IT Spending, Says Gartner
Gartner cuts worldwide IT spending growth to 1.4 percent from 2.7 percent for 2017.
Market research firm Gartner on Monday cut its growth forecast for global information technology spending as a stronger U.S. dollar will weigh on earnings.
Global IT spending is estimated to grow 1.4 percent to $3.5 trillion in 2017 on a year-on-year basis compared to Gartner’s previous quarter forecast of 2.7 percent growth, the firm said in a statement.
The strong U.S. dollar has cut $67 billion out of our 2017 IT spending forecast. We expect these currency headwinds to be a drag on earnings of U.S.-based multinational IT vendors through 2017.John-David Lovelock, Research Vice President, Gartner
The data centre system segment is expected to grow 0.3 percent in 2017, Gartner said, compared to a degrowth seen last calendar year. Still, the segment is witnessing a slowdown in the server market as enterprises move away from buying servers to rent space on the cloud from companies such as Amazon, Google and Microsoft.
The IT services segment is projected to grow at 2.3 percent compared to its previous quarter’s forecast of 3.6 percent growth, Gartner said, attributing the slowdown to “potential changes of direction anticipated regarding U.S. policy — both foreign and domestic”.
Mobile Phones Lead The Way
Driven by sales of mobile phones and improvement in sales of printers, personal computers, tablets and printers, worldwide spending on devices is expected to grow 1.7 percent to $645 billion in 2017. Last year, this segment saw a degrowth of 2.6 percent. Within the segment, mobile phones will emerge as the top performer, Gartner said.
Mobile phone growth in 2017 will be driven by increased average selling prices (ASPs) for phones in emerging Asia/Pacific and China, together with iPhone replacements and the 10th anniversary of the iPhone.Gartner Report
According to the market research firm, Sales of PCs, laptop and printers separately will continue to decline because of long replacement cycles and rising cost of components.
While the report pegs spending by Indian IT companies lower, it does not suggest that the country will perform poorly. “India will do very well,” said Lovelock in a telephonic conversation.
He explained that the spending outlook hasn’t changed in local currency terms. Due to a stronger dollar, the local currency spend translates to fewer dollars. Hence, a 3.3 percent growth in spending in rupee terms, would only reflect as a 1.4 percent growth in dollar terms, he added.
A rising dollar does better for those Indian players which sell services to U.S. companies as they are paid in dollars, Lovelock stated.