Gartner Forecasts Worldwide IT Spending to Reach $4 Trillion in 2021

Rhea-AI Summary

Worldwide IT spending is anticipated to reach $4.1 trillion in 2021, marking an increase of 8.4% from 2020, as reported by Gartner. Organizations are shifting funding for digital business initiatives from IT departments to other business units. All IT spending segments are projected to experience growth through 2022, with the most significant increases in devices (14%) and enterprise software (10.8%). However, recovery rates vary by region and industry, suggesting a K-shaped economic recovery.

Positive

• Projected IT spending growth of 8.4% in 2021 to $4.1 trillion.
• Strong growth expected in devices (14%) and enterprise software (10.8%).
• Shift in funding sources indicates a strategic transformation in IT's role within businesses.

Negative

• Variances in recovery rates across regions and industries may affect overall growth.
• K-shaped recovery indicates some sectors, like retail, will lag behind others.

Worldwide IT spending is projected to total $4.1 trillion in 2021, an increase of 8.4% from 2020, according to the latest forecast by Gartner, Inc. The source of funds for new digital business initiatives will more frequently come from business departments outside IT and charged as a cost of revenue or cost of goods sold (COGS).

“IT no longer just supports corporate operations as it traditionally has, but is fully participating in business value delivery,” said John-David Lovelock, distinguished research vice president at Gartner. “Not only does this shift IT from a back-office role to the front of business, but it also changes the source of funding from an overhead expense that is maintained, monitored and sometimes cut, to the thing that drives revenue.”

All IT spending segments are forecast to have positive growth through 2022 (see Table 1). The highest growth will come from devices (14%) and enterprise software (10.8%) as organizations shift their focus to providing a more comfortable, innovative and productive environment for their workforce.

Table 1. Worldwide IT Spending Forecast (Millions of U.S. Dollars)
	2020 Spending	2020 Growth (%)	2021 Spending	2021 Growth (%)	2022 Spending	2022 Growth (%)
Data Center Systems	219,940	2.3	236,806	7.7	247,513	4.5
Enterprise Software	466,647	-2.1	516,872	10.8	571,725	10.6
Devices	663,223	-6.9	755,798	14.0	778,949	3.1
IT Services	1,021,187	-1.8	1,112,626	9.0	1,193,461	7.3
Communications Services	1,386,471	-0.7	1,450,444	4.6	1,504,743	3.7
Overall IT	3,757,468	-2.2	4,072,547	8.4	4,296,391	5.5
Source: Gartner (April 2021)

As one example, the increased focus on the employee experience and well-being are propelling technology investments forward in areas such as social software and collaboration platforms and human capital management (HCM) software.

Although optimization and cost savings efforts won’t disappear simply because there’s more economic certainty in 2021, the focus for CIOs through the remainder of the year will be completing the digital business plans that are aimed at enhancing, extending and transforming the company’s value proposition.

“Last year, IT spending took the form of a ‘knee jerk’ reaction to enable a remote workforce in a matter of weeks. As hybrid work takes hold, CIOs will focus on spending that enables innovation, not just task completion,” said Mr. Lovelock.

Return to pre-pandemic spending levels varies

Recovery across countries, vertical industries and IT segments still varies significantly, prompting a K-shape economic recovery. From an industry perspective, banking and securities and insurance spending will closely resemble pre-pandemic levels as early as 2021, while retail and transportation won’t see the same recovery until closer to 2023.

Regionally, Latin America is expected to recover in 2024, while Greater China has already surpassed 2019 IT spending levels. North America and Western Europe are both expected to recover in late 2021.

More detailed analysis on the outlook for global IT spending is available in the Gartner webinar "IT Spending Forecast, 1Q21 Update: How the Winners are Winning." Learn more about emerging trends, expected challenges and next steps for CIOs and IT leaders in the free Gartner E-Book “Top Priorities for IT: Leadership Vision for 2021.”

Gartner’s IT spending forecast methodology relies heavily on rigorous analysis of sales by thousands of vendors across the entire range of IT products and services. Gartner uses primary research techniques, complemented by secondary research sources, to build a comprehensive database of market size data on which to base its forecast.

The Gartner quarterly IT spending forecast delivers a unique perspective on IT spending across the hardware, software, IT services and telecommunications segments. These reports help Gartner clients understand market opportunities and challenges. The most recent IT spending forecast research is available to Gartner clients in “Gartner Market Databook, 1Q21 Update.” This quarterly IT spending forecast page includes links to the latest IT spending reports, webinars, blog posts and press releases.

About the Gartner Information Technology Practice

The Gartner IT practice provides CIOs and IT leaders with the insights and tools to drive the organization through digital transformation to lead business growth. Additional information is available at https://www.gartner.com/en/information-technology. Follow news and updates from the Gartner IT practice on Twitter and LinkedIn using #GartnerIT.

About Gartner

Gartner, Inc. (NYSE: IT) is the world’s leading research and advisory company and a member of the S&P 500. We equip business leaders with indispensable insights, advice and tools to achieve their mission-critical priorities and build the successful organizations of tomorrow.

Our unmatched combination of expert-led, practitioner-sourced and data-driven research steers clients toward the right decisions on the issues that matter most. We are a trusted advisor and an objective resource for more than 14,000 organizations in more than 100 countries — across all major functions, in every industry and organization size.

To learn more about how we help decision makers fuel the future of business, visit gartner.com.

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FAQ

What is the projected IT spending for 2021 according to Gartner?

Gartner projects IT spending to reach $4.1 trillion in 2021, an increase of 8.4% from 2020.

Which IT spending segments are expected to grow the most in 2021?

Devices are expected to grow by 14%, while enterprise software is projected to increase by 10.8%.

How does the funding for digital business initiatives change according to the latest Gartner report?

Funding for digital business initiatives is increasingly coming from business departments outside of IT.

What does the K-shaped recovery mean for IT spending?

The K-shaped recovery indicates that some industries will recover to pre-pandemic spending levels faster than others.

When is North America expected to recover its IT spending to pre-pandemic levels?

North America is expected to recover in late 2021 according to Gartner's report.