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Government IT spending to be hit hardest by rising US dollar strength, warns Gartner

Gartner predicts IT spending declines across all industries and vertical markets during 2015

The strength of the US dollar will cause IT spending to fall by 3.5% across all vertical markets in 2015, as rising hardware costs prompt CIOs to delay or halt new technology deployments, Gartner has predicted.

The analyst house said the on-going disparities in global currency rates are likely to cause a slowdown in IT spending across all industries, with the public sector set to see the biggest drop.

As such, Gartner predicts IT spending will hit $2.69tn in 2015, down from $2.79tn in 2014.

Gartner research vice-president Anurag Gupta said IT buyers are not the only ones feeling the pressure from unfavourable exchange rates.

“Appreciation of the US dollar, mainly against the euro, yen and ruble, along with the relative slowdown of emerging markets – particularly Russia, Brazil and China – had a double impact on IT spending in 2015,” he said.

“Unsurprisingly, most technology firms reporting revenue in US dollars have taken a negative hit on their quarterly revenue earnings.”

IT spending within the public sector looks set to take the largest dip of all industries during 2015, with Gartner forecasting a 5% drop, which is hardly surprising given the austerity drives almost all governments across the globe seem to be subscribing to.

As previously reported by Computer Weekly, this has seen the US Office of Management and Budget advising federal agencies to reduce their departmental spend by 10% by revising how they approach IT purchases.

Read more about IT spending trends

The UK government and wider public sector has also been working to a similar cost reduction agenda, with IT reportedly bearing the brunt of spending cuts.

However, while all industries are expected to spend less in 2015, said Gartner, there are signs to suggest firms in some industries – namely banking and securities, retail and healthcare – are likely to increase their IT budgets as they move to digitise more of their services over the coming years.  

Gartner research director Rajesh Kandaswamy said that despite the analyst firm's forecast suggesting IT spending will fall by 2.5% in 2015, technology remains a particularly key investment area for the banking and securities industry.

"As banks grapple with growth and regulation issues, while battling new financial technology competitors, they will also look to invest in data solutions, driven by availability of big data, analytics tools and competition from financial technology companies that rely on big data and analytics more to reach the right customer and analyse the risks,” he said.

“Cyber security remains an area of focus for executives in consumer banking segments, while an emerging area of interest is smart machine technology, including artificial intelligence, robotic process automation, intelligent analytics and deep learning."

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