According to a recently released IDC report, global IT spending is expected to fall dramatically in 2016 as emerging markets retract in response to economic weaknesses and the smartphone market hits peak saturation, resulting in a slowdown of tech spending. While annual growth of five to six percent has been the norm since 2010, 2016 is expected to only see a two percent increase, for a total of $2.3 trillion. The U.S. appears to be relatively insulated from this trend, with spending projected to maintain a four percent increase level, as has been the norm over the last four years.
"Cloud spending has seen a dramatic increase across multiple markets."
"Aside from exchange rate volatility, IT spending has been relatively stable for the past five years," said Stephen Minton, vice president of IDC's Customer Insights and Analysis group in a statement. "A solid PC upgrade cycle in 2014 was followed by a major cycle of infrastructure spending in 2015, mostly driven by cloud."
As Minton claims, cloud spending has seen a dramatic increase across multiple markets, rising 16 percent for cloud servers and 10 percent for storage systems as enterprise software and hosted solutions grow 7 percent.
The major slowdown seems to be occurring due to the economic weakness found in the emerging markets of Brazil, Russia, India and China. Collectively, these markets only saw a one percent increase, with China's recent economic troubles particularly hitting hard.
"The slowdown in China is largely connected to increasing rates of market penetration and price competition, but the current economic uncertainty also represents a significant downside risk for the rest of 2016," said Minton. Yet gains in markets like India — which, while losing their double digit spending percentages is still going to see impressive growth — may help spending remain on track in years to come.