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Brexit flattens worldwide IT spending but Malaysia's will increase 6.5 percent, Gartner says

AvantiKumar | July 11, 2016
Currency fluctuations as well as the UK's vote to leave the European Union account for Gartner's revised IT spending forecasts.

John-David Lovelock, Research Vice President, Gartner 

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


According to consulting firm Gartner, currency fluctuations and the UK's recent vote to leave the European Union point to a revised flat worldwide IT spending forecast for 2016, though Malaysia's will increase 6.6 percent to reach almost MYR68 (U$17) billion in 2016.

John-David Lovelock, research Vice President at Gartner, said that worldwide IT spending will be flat in 2016, totalling US$3.41 trillion, which is actually up from last quarter's forecast of negative 0.5 percent growth.

The change in the forecast is mainly due to currency fluctuations, said Lovelock. "The current Gartner Worldwide IT Spending Forecast assumes that the U.K. would not exit the European Union. With the U.K.'s exit, there will likely be an erosion in business confidence and price increases, which will impact U.K., Western Europe and worldwide IT spending."

He said the U.K. has yet to define the post-vote change. The "leave" vote will quickly affect IT spending in the U.K. and in Europe while other changes will take longer. The long-term uncertainty in work status will make the U.K. less attractive to new foreign workers. Retaining current non-U.K. staff and having less access to qualified new hires from abroad will impair U.K. IT Departments.
The revised IT spending forecast for Malaysia will remain in the positive though the growth rate is smaller at 1.5 percent when reported in US$ due to currency fluctuations, he added.

Previously, Gartner cited modernisation and digital transformation would fuel Malaysia's higher IT spending forecasts. The table below shows Gartner's revised forecast.

Gartner Table July 2016The pace of change in IT

"2016 marked the start of an amazing dichotomy," said Lovelock. "The pace of change in IT will never again be as slow as it is now, but global IT spending growth is best described as lacklustre."

Speaking of the revised July 2016 worldwide forecast data, he said, "2016 is the year that business focus turns to digital business, the Internet of Things and even algorithmic business. To fund these new initiatives, many businesses are turning to cost optimisation  efforts centring around the new digital alternatives (for example, SaaS instead of software licenses, voice over LTE [VoLTE] instead of cellular and digital personal assistants instead of people) to save money, simplify operations and speed time to value."

"It is precisely this new breadth of alternatives to traditional IT that will fundamentally reshape what is bought, who buys it and how much will be spent," said Lovelock.
Gartner's worldwide IT spending forecast methodology includes the 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.


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