IT Spending Will Jump More Than Expected In 2021, Surpassing $4T: Gartner

2021 IT spending will grow significantly versus that of 2020, which was hit hard by the COVID-19 pandemic, and is expected to continue growing in 2022, as businesses focus more on digital initiatives and less on operational costs, Gartner says.

IT spending for 2021 is now expected to rise 8.4 percent in 2021 as the world emerges from the COVID-19 pandemic, a major revision from the 6 percent growth forecast only three months ago, according to Gartner.

The Stamford, Conn.-based research firm this week said it estimated IT spending for 2021 to reach $4.07 trillion, up from its January estimate of $3.92 trillion and well above its estimated 2020 IT spending of $3.76 trillion.

Looking ahead, Gartner estimated 2022 IT spending to reach $4.30 trillion, up a sizeable 5.5 percent over 2021.

[Related: The State Of IT Salaries And WFH Post-COVID-19: Hired Survey]

Leading the way in 2021 is spending on devices, which Gartner forecast to rise 14 percent to $755.80 billion. That was followed by enterprise software, expected to rise 10.8 billion to $515.87 billion; IT services, expected to rise by 9.0 percent to $1.11 trillion; data center systems, expected to rise 7.7 percent to $236.81 billion; and communications services, expected to rise 4.6 percent to $1.45 trillion.

The higher growth in spending on devices and enterprise software will likely come as businesses continue to investing in comfortable and productive workforce environments, Gartner said.

The primary driver for increased IT spending in 2021 is coming less from investing in IT operations and more from new digital business initiatives, wrote John-David Lovelock, distinguished research vice president at Gartner in a statement.

“IT no longer just supports corporate operations as it traditionally has, but is fully participating in business value delivery,” Lovelock wrote. “Not only does this shift IT from a back-office role to the front of business, but it also changes the source of funding from an overhead expense that is maintained, monitored and sometimes cut, to the thing that drives revenue.”

Gartner is by no means alone in focusing on digital initiatives as a driver of growth going forward.

New York-based management consulting firm McKinsey & Company late last year surveyed 899 C-level executives and senior managers across a wide range of geographies, industries, and company sizes and found that the COVID-19 pandemic has significantly accelerated the pace of adoption of digital transformation technologies, as well as other speeding up other business changes.

That survey also found that companies significantly shortened their reaction time to changes in the business environment due to the coronavirus.

Gartner said that some parts of the IT industry could recover to pre-pandemic levels in 2021, while others will need until 2022 to do so.

For instance, banking and securities and insurance spending will likely return to pre-pandemic levels this year, while retail and transportation will likely need until 2023.

On a geographic basis, Gartner estimated that IT spending in China has already surpassed that of 2019, while spending in North America and Western Europe will likely do so late this year. Latin America, however may not recover until sometime in 2024.