It’s Official: Tech Spending Is Slowing Down in 2016

After several years of consistent growth, the world’s information technology industry is on track to experience the biggest slowdown in spending by individuals companies and governments since the 2010 financial crisis, the research firm IDC said today.

With the global market for smartphones more or less saturated — everyone who wants one pretty much has one — and emerging markets like China experiencing economic troubles, global spending on technology, which has grown by about 5 percent or 6 percent consistently for the last five years, is due to grow by only 2 percent, the firm said.

The small percentage declines hide some pretty big financial numbers: Total IT spending on computing hardware, software and services will reach $2.3 trillion in 2016 and — after adding in spending on telecom services — it will reach $3.8 trillion. 

Some markets will experience declines. Spending in China grew by 11 percent last year after backing out the effect of currency exchange rates, and is expected to see its first-ever decline in spending. Spending in China on smartphones has leveled off and will decline for personal computers — no surprise there. Software spending is expected to hold steady, but accounts for only 5 percent of the total so has little effect. Russia and Brazil are both expected to see declines in spending, too.

Spending in the U.S. is expected to remain stable and is expected to grow by about 4 percent despite ongoing weaknesses in sales of PCs and servers. U.S. companies continue to spend their money on cloud computing, mobile and social technology and on analyzing their data for insights that can make or save them money. But IDC says to expect 4 percent growth to be the “new normal” at least through 2017.

IT spending in Europe will grow by 1 percent down from 5 percent last year while the Asia-Pacific region will grow 2 percent, down from 7 percent last year. India will remain a relative bright spot — it grew 13 percent last year — but will experience a slowdown too, growing at about 8 percent.