Artificial Intelligence To Drive 4.5% Rise In Global IT Spending In 2018

Plastic armor covers electrical cables in Moscow, Russia. (Photographer: Andrey Rudakov/Bloomberg)

Global spending on information technology is expected to rise 4.5 percent from last year as businesses increasingly adapt newer technologies such as artificial intelligence, internet of things and blockchain.

IT spending is seen at $3.7 trillion in 2018, and will continue to increase in 2019 as well, according to a report by technology research firm Gartner Inc.

The spending will be triggered by traditional businesses undergoing a digital transformation and investing newer technologies such as blockchain services which enable secure online transactions and internet of things which connects physical devices and objects with electronics, sensors for exchanging data. Investment in artificial Intelligence alone is likely to add $2.9 trillion in new business value opportunities by 2021.

That business value is attributable to using AI to, for example, drive efficiency gains, create insights that personalize the customer experience, entice engagement and commerce, and aid in expanding revenue-generating opportunities as part of new business models driven by the insights from data.

John-David Lovelock, Vice President-Research, Gartner

Indian IT firms need to ‘carve out a niche' for themselves in artificial intelligence to stay relevant, and not just rely on outsourcing services, Lovelock told BloombergQuint in an interview. “It is going to be tricky to continue benefiting from outsourcing and data centres over time,” he added.

Key Highlights

Enterprise software will continue to witness strong growth, with worldwide software spending seen 9.5 percent higher to $389 billion, in 2018 and at $421 billion in 2019.
The IT services sector is likely to grow 5.5 percent this year and 4.6 percent in 2019.
The devices segment grew for the first time in two years last year, posting a 5.7 percent increase to $667 billion. The trend is expected to continue this year too, with growth to $704 billion, aided by a 9.1 percent uptick in iOS shipments this year.
However, the devices segment growth is likely to soften moving into 2019, as PC sales growth is estimated to remain flat, and end-user spending on mobile phones likely to see marginal growth.
Gartner also noted a few roadblocks in the global IT growth arising from potential impact of Brexit, currency fluctuations and a possible global recession.