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Gartner remains bullish about Malaysia’s IT spending in 2016, forecasts 7.6% growth

AvantiKumar | Jan. 22, 2016
Digital transformation will help drive IT spending in Malaysia to almost RM69 (US$15.77) billion, up 7.6 percent over 2015, the highest growth rate in the Asia Pacific region, says Gartner's John-David Lovelock.

John-David Lovelock, Research Vice President, Gartner Inc

Photo - John-David Lovelock, Research Vice President, Gartner Inc.


IT research firm Gartner remains bullish about IT spending,in Malaysia, which for 2016 is expected to reach almost RM69 (US$15.77) billion, up 7.6 percent over 2015, the highest growth rate in the Asia Pacific region, well above the average 4.5 percent for the region,

Commenting on Gartner's January 2016  Worldwide IT Spending Forecast report, Gartner's research vice president John-David Lovelock said worldwide IT spending is forecast to total US$3.54 trillion dollars in 2016, just a 0.6 percent increase over 2015 spending of $3.52 trillion dollars.

Lovelock said that 2015 saw the largest U.S. dollar drop in IT spending since Gartner began tracking IT spending. US$216 billion dollars less was spent on IT in 2015 than in 2014 and 2014 spending levels won't be surpassed until 2019.

"The rising U.S. dollar is the villain behind 2015 results," he said. "U.S. multinationals' revenue faced currency headwinds in 2015. However, in 2016 those headwinds go away and they can expect an additional 5 percent growth."

Table (below). Worldwide IT Spending Forecast (Billions of U.S. Dollars)

Gartner Table Jan 2016Source: Gartner (January 2016) 

Devices dip

Speaking of global trends, Lovelock said that the devices market (PCs, ultramobiles, mobile phones, tablets and printers) was forecast to decline 1.9 percent in 2016.

He said that a "combination of economic conditions preventing countries such as Russia, Japan and Brazil from returning to stronger growth, together with a shift in phone spending in emerging markets to lower-cost phones coupled  with weak tablet adoption in regions where there was an expectation of growth."

However, premium devices will drive the PC market forward with the move to Windows 10 and Intel Skylake-based PCs, said Lovelock. Gartner has slightly reduced the speed of adoption over the forecast period, as buying in Eurasia, Japan, and the Middle East and North Africa moves away from purchasing these relatively more expensive devices in the short term, but expect them to revert back to buying in 2017 as the economic environment stabilises.

Meanwhile, Data centre systems' spending has been projected to reach $75 billion in 2016, a 3.0 percent increase from 2015, he said. The server market "is the segment that has seen the largest change since the previous quarter's forecast. The server market has seen stronger-than-expected demand from the hyperscale sector, which has lasted longer than expected."

Softening emerging markets

Lovelock said that the "worsening economic environment in emerging markets has had little effect on the global enterprise software spending forecast for 2016, with IT spending on pace to total $326 billion, a 5.3 percent increase from 2015. However, key countries in emerging markets, particularly Brazil and Russia, face escalating political and economic challenges. Organisations in those regions must balance cost cutting with growth opportunities during times of economic concern."

In addition, he said that spending in the IT services market will return to growth in 2016, following a decline of 4.5 percent in 2015. IT services spending is projected to reach US$940 billion in 2016, up 3.1 percent from 2015. "This is due to accelerating momentum in cloud infrastructure adoption and buyer acceptance of the cloud model."

However, Telecom services spending will decline 1.2 percent in 2016, with spending reaching US$1,454 trillion. The segment will be impacted by the abolition of roaming charges in the European Union and parts of North America.

The Gartner Worldwide IT Spending Forecast is an indicator of major technology trends across the hardware, software, IT services and telecom markets. The most recent IT spending forecast research is available at Gartner's website.


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