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Gartner: IT Spending Showing Signs of Slowing

After initially forecasting a jump in annual, worldwide spending on IT for 2016, research firm Gartner scaled back its estimates April 7, and now expects a drop, due to what it calls “economic uncertainty” among businesses.

Previously, Gartner had expected a .5 percent year over year jump in IT spending for 2016, to $3.5 trillion, but currency fluctuations and a bit of nervousness among companies that would normally spend on IT has caused Gartner to drop their forecast to $3.49 trillion.

Telecom IT service spending is now expected to decline 2% this year (to $1.4 trillion) due to prolonged economic downturns in places like Russia and Brazil a minor slowdown in growth in China, hurting consumer confidence and slowing spending in fixed voice services.

The other area of IT spending seeing a noticeable drop off is the device market (covering everything from PCs to smartphones), with Gartner now predicting a 3.7% drop this year, partly due to global smart phone saturation, partly due to declines in PC demand.

"There is an undercurrent of economic uncertainty that is driving organizations to tighten their belts, and IT spending is one of the casualties," said John-David Lovelock, research VP for Gartner. “Concurrently, the need to invest in IT to support digital business is more urgent than ever. Business leaders know that they need to become digital businesses or face irrelevance in a digital world. To make that happen, leaders are engaging in tough cost optimization efforts in some areas to fund digital business in others."

The IT spending areas that are still on pace for year over year growth: data center systems ($175 billion, up 2.1%), enterprise software ($321 billion, up 4.2%) and IT services ($929 billion, up 2.1%).