January 8, 2018
Forrester projects that the global tech market for business and government purchases of technology goods, software, and services will grow by around 5% in 2018 and 2019 measured in constant currencies (see “The Global Tech Market Outlook for 2018 To 2019: Continued Tech Growth Will Peak In 2018 At 5.1% In Constant Currencies“). Measured in US dollars, tech market growth will be stronger in 2018 at 6% due to a slightly weaker US dollar, then slow to 4.6% 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 growth 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% in Australia and Korea, 2% in continental Europe, Canada, and Latin America, and 1% 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%. 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 from that could cause even slower tech market growth in 2019.
- Software and services will continue to be the biggest tech categories, with cloud 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% in constant currencies (8.3% in US dollars, to $738 billion) in 2018, and by 7-1/2% in 2019. Cloud platform services are growing at 20% rates, which will help the overall tech outsourcing category (which is where we count cloud platform services) grow by around 6%. Consulting services are now starting to feel the positive effects of cloud, with growth around 5%. 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. In growing 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 BT software and services technologies for winning, serving and retaining customers than spending on back-office technologies. But 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.