- 07 Apr 2022
- ICICIdirect Research
GARTNER REVISES DOWNWARD GLOBAL IT SPENDING PROJECTIONS
News: According to The Economic Times, Garner projects global IT spending to grow 4% in 2022 to US$4.4 trillion. This is revised downward from their projections released in January 2022, where they have projected global IT spending to grow by 5.1% in 2022
Views: Global IT spending data is bifurcated into spending on data centre systems, enterprise software, devices , IT services and communication services for which 4% growth is projected. As per our understanding, IT services spending is an appropriate number to look at in context to Indian IT companies. IT services spending was earlier projected to grow at 7.9% in 2022 to US$1279 bn, which is now revised downward to 6.8% growth to US$1266 bn. Some of the challenges, which have been listed for downward projections are i) supply side challenges, which as per Gartner would last till the end of CY23 ii) inflation rise which could impact spending in some of the sectors iii) currency volatility. It seems that supply side challenges for global IT companies may last long than expected, which would, in turn, impact margins in the medium term. Only saviour in this case would be price hike. Continued talent crunch for the longer period would make their price hike case stronger. However, it would interesting to see whether the company would be able to get price hike in accelerated nature or gradual one
Impact: Negative