Aussie tech services spend to hit $67B by 2022

Spending on IT and communications services in Australia is anticipated to reach a combined $67 billion by the end of the year. 

According to research firm Gartner, this represents growth of roughly 10 per cent compared to spending in these sectors during 2021, which was $61 billion.

This is a considerably higher growth rate than the global forecast, which the firm predicted growth in these combined sectors to rise by 3.2 per cent, from US$2.6 trillion last year to US$2.7 trillion by the end of 2022.

Breaking down the local figures, Australia’s combined services growth mostly comes from IT services, which is forecast to reach $42 billion this year, representing growth of 12.2 per cent year-on-year.

Meanwhile, communications services will see a comparatively modest rise of 6.5 per cent, reaching $25 billion.

On the global stage, spending on IT services is expected to grow by 6.8 per cent, to US$1.3 trillion, while communications service is predicted to rise by 0.3 per cent, to $1.4 trillion.

These figures come as overall IT spending in Australia is tipped to reach $117 billion by the end of the year, which is a rise of 13.1 per cent year-on-year, while global IT spending is predicted to rise by 4 per cent to US$4.4 trillion over the same time period.

“This year is proving to be one of the noisiest years on record for CIOs,” Gartner research vice president John-David Lovelock said. 

“Geopolitical disruption, inflation, currency fluctuations and supply chain challenges are among the many factors vying for their time and attention, yet contrary to what we saw at the start of 2020, CIOs are accelerating IT investments as they recognise the importance of flexibility and agility in responding to disruption.

“As a result, purchasing and investing preference will be focused in areas including analytics, cloud computing, seamless customer experiences and security.”

The effect of inflation on IT hardware in particular however is starting to ease up and is starting to spill over into services, as well as software, Gartner claimed.

Additionally, technology service providers have been increasing the prices of their offerings due to a lack of IT talent, the research firm continued, which is resulting in more competitive salaries and, in turn, helping to increase spending growth within services and software.

Meanwhile, the Russian invasion of Ukraine is not expected by Gartner to have a direct impact on global IT spending, with price and wage inflation combined with talent shortages and delivery uncertainties instead believed to have a more significant effect.

“The rise of enterprise application software, infrastructure software and managed services in the near and long term demonstrates that the trend toward digital transformation is not a one- or two-year trend, rather it is systemic and long-term,” Gartner noted.

“For example, infrastructure as a service (IaaS) underpins every major consumer-focused online offering and mobile application, accounting for a significant portion of the almost 10 per cent growth in software spending in 2022.”

Lovelock added that while some IT spending was put on hold in early 2022 due to recent waves of COVID-19 variants, including Omicron, this is expected to clear in the short term.