Forrester projects that the global tech market for business and government purchases of technology goods, software, and services will grow by around 5 percent in 2018 and 2019 (subscription required) measured in constant currencies.
Measured in US dollars, tech market growth will be stronger in 2018 at 6 percent due to a slightly weaker US dollar, then slow to 4.6 percent growth in 2019. The updated constant-currency forecast for 2018 is a percentage point stronger than prior forecasts, with 2016 and 2017 forecasts also higher due to better economic growth around the world.
Our initial forecast for the 2019 global tech market shows growth slowing slightly from the 2018 rate, with the potential for an even sharper slowdown if economic risk factors in the US, Europe, and China materialize.
Here are the key characteristics of the $3.2 trillion global tech market in 2018 and 2019:
Sustained economic growth is the primary cause of faster tech market growth in 2018. The US, China, India, and a handful of countries with strong economic growth will also see the strongest tech market growth. Japan, most of Europe, and many emerging economies may not see accelerations in economic growth, but continuing real GDP growth of around 3 percent in Australia and Korea, 2 percent in continental Europe, Canada, and Latin America, and 1 percent in Japan will increase business confidence and support stronger growth in tech spending. The tech markets of Russia and the UK will be the weakest in 2018. Similar economic drivers will help 2019 tech spend grow by a bit less these than 5 percent. However, the mixed impacts of the new US tax law, the potential for a disruptive Brexit, and continuing concerns about China's high debt loads are risk factors that could cause even slower tech market growth in 2019.
Software and services will continue to be the biggest tech categories, with cloud being the primary growth enabler. The cloud transformation is almost complete in some software categories like CRM, eCommerce, and ePurchasing, and is underway in many others. That shift will help software purchases increase by 7.3 percent in constant currencies (8.3 percent in US dollars, to $738 billion) in 2018, and by 7.4 percent in 2019. Cloud platform services are growing at 20 percent rates, which will help the overall tech outsourcing category (which is where we count cloud platform services) grow by around 6 percent. Consulting services are now starting to feel the positive effects of cloud, with growth around 5 percent. Even computer hardware, which has suffered in the US due to high levels of cloud platform adoption, will get a boost in 2018 from build-outs of cloud infrastructure in Europe and Asia, as well as a resurgence in spending on PCs and tablets.
Business technologies (BT) that help firms win, serve, and retain customers will continue to be a positive force in global tech market growth. Ingrowing economies, firms tend to be more focused on growing revenues rather than cutting costs. In 2018 and 2019, this focus on revenue growth will cause faster growth in spending on BT software and services technologies for winning, serving, and retaining customers than spending on back-office technologies. However, the growth gap between these two categories of tech budgets will narrow in 2018 and 2019 as firms start to upgrade their back-office systems to keep up with front-office changes.
Based on our current forecast for 2018, CIOs in most countries and most industries can plan for positive growth for tech budgets. However, we think 2019 may well bring a more challenging business environment, at least in the US and the UK, and potentially elsewhere.
For more of Forrester's global tech market outlook for 2018 and 2019, check out the latest forecast here [subscription required].