The IT services sector is expected to grow 4.1% in 2021, but will not immediately rebound to 2019 spending levels, according to market research firm Gartner.
Gartner's latest IT spending forecast shows all segments growing again in 2021, after declining in 2020. The company said the worldwide IT services market will drop 4.6% in 2020 to $992 billion compared with $1.04 trillion in 2019. IT services spending is expected to top the trillion-dollar mark in 2021 but fall short of 2019 outlays.
"We are still not back to 2019 spending levels until 2022," said John-David Lovelock, research vice president at Gartner, who discussed the Gartner IT services forecast in a phone interview.
Digital business initiatives will drive spending and favor larger software and services firms that maintain customer relationships at the CIO level and offer the widest array of skill sets, Lovelock said. "All forms of digital business are on the table," Lovelock said.
In addition, the larger software and services companies are more likely to survive cutbacks if enterprises shrink the number of external providers with which they work, he added. As enterprises cull their partner ecosystems, the survivors stand to gain a larger slice of the spend.
The smaller partners, however, will not be entirely cut out of the spending outlook. Such companies can focus on a niche portion of digital business transformation, Lovelock said. For example, a large company might build a custom digital business application for a customer and the smaller company's role would be to optimize and run the application, he said.
Individual IT service providers are predicting a return to growth in 2021. Accenture, a $44.3 billion professional services firm, last month forecasted growth rates in high single digits to low double digits during the second half of its 2021 fiscal year, which ends in August. The company is investing $3 billion in its cloud business. Cloud services have continued to see demand amid the COVID-19 pandemic.
Gartner's forecast pegs overall IT market growth at 4% for 2021, when spending is predicted to reach $3.8 trillion. Gartner expects the enterprise software category to experience the highest growth at 7.2%, boosted by spending on remote work technology, hyperautomation and digital services such as distance learning and telehealth.