Gartner predicts that global IT spending will reach $4 trillion in 2021

Gartner, the world's leading information technology research and advisory company, predicts that global total IT spending will reach $4.1 trillion in 2021, an increase of 8.4% from 2020. Business units other than IT will more frequently provide funding for new digital business initiatives, and this funding will be recorded as revenue cost or cost of goods sold (COGS).

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“IT is no longer just supporting the business operations as it once was, but is now fully engaged in creating business value,” said John-David Lovelock, distinguished research vice president at Gartner. “This not only transforms IT from a back-office department to a front-line business department, but also shifts the funding source from an overhead that is controlled, monitored and sometimes even cut to an expense that drives revenue.”

All IT spending segments are expected to return to growth between now and 2022 (see Table 1). Equipment (14%) and enterprise software (10.8%) will be the fastest-growing segments as companies shift their focus to providing employees with a more comfortable, innovative, and productive environment.

Table 1. Global IT spending forecast (Unit: million US dollars)

Source: Gartner (April 2021)

Technology investments in areas such as social software and collaboration platforms and human capital management (HCM) software are being driven by organizations’ growing focus on employee experience and wellness.

While organizations will not reduce their optimization and cost-saving efforts simply because there is greater economic certainty in 2021, for the remainder of the year CIOs will focus on completing digital business initiatives that enhance, expand, and transform their company’s value proposition.

“Last year, there was a ‘knee-jerk’ in IT spending that enabled remote workforces to take shape in a matter of weeks,” said Mr. Lovelock. “As hybrid work models take root, CIOs will focus on spending that enables innovation, in addition to spending that is required to get the job done.”

The pace of recovery to pre-pandemic spending levels varies

The recovery of different countries, vertical industries and IT market segments still varies greatly, and the overall economic recovery shows a K-shaped trend. In terms of industry, the banking, securities and insurance industries will approach pre-epidemic spending levels as early as 2021; the retail and transportation industries will not return to this level until close to 2023.

Regionally, Latin America is expected to recover in 2024, while IT spending in Greater China has exceeded 2019 levels. North America and Western Europe are expected to recover near the end of 2021.