We published today our fall update to Forrester's US tech market outlook for 2014 and 2015 (see "US Tech Market Growth Remains Solid For 2014 And 2015: The BT Agenda Will Be The Main Driver of 5% To 6% Growth"), as well as our forecast for US tech market growth by industry (see "US Tech Spending By Industry, 2014 To 2015 — Which Industries Will Lead The BT Charge?").
Our new 2014 projection of 4.5% growth in US business and government tech purchases without telecommunications services is lower than our April forecast of 7.1%, due to weaker- than-expected in Q1 2014 and softness in hardware purchases. However, our forecast of 5.6% growth for tech purchases including telecom was in line with our April projection of 5.6% growth,with a rebound in business and government spending in this category from the depressed levels in 2013. For 2015, we are now forecasting 6.2% growth in US tech purchases without telecom, and 5.8% with telecomm. These growth rates are about a percentage point lower than our April 2014 projections, the result of US economic growth remaining around 3% in real terms and 4.5% to 5% in nominal terms as economic weakness in Europe, Latin America, and Asia along with a strong US dollar holds down US export growth. The recent drop in US stock prices and lower US bond rates is consistent with the financial market acknowledging these soft spots in the economic outlook, but not a reason to revise down our economic growth assumptions. Notwithstanding the financial market gyrations, continuing solid job growth and falling unemployment will help support moderate US consumer spending growth, falling energy prices will provide a lift to both consumers and business, and the fiscal positions of the US Federal, state, and local governments have improved to support increases in government spending.
Within the overall tech market, software continues to be the star category, with growth of 6.8% in 2014 and 8.7% in 2015. Software-as-a-service spending would do especially well, growing by over 20% in both years. Tech consulting services for guidance in choosing this software, implementing it, and related services like process re-design, security, and training will rise by 7% in 2014 and 8.1% in 2015. But hardware — both computer equipment and communications equipment — will be weak in 2014, with the former finally starting to expand at a 6.8% pace in 2015. Also weak will be tech outsourcing, rising by 3% in 2014 and 3.5% in 2015. Telecomm services, after the 2014 rebound, will slow back to 4.5% growth in 2015. Lastly, spending on the CIO organization's staff will rise by 7.1% in 2014 and 6% in 2015.
A key driver of US tech market growth will be the Business Technology (BT) agenda, that is, technologies for winning, serving, and retaining customers. As we recently reported (see "Sizing the US CIO's Business Technology Agenda — Business Technologies Will Grow Faster Than Information Technologies And Will Exceed Half Of New Project Spending"), the BT agenda in 2014 will capture 27% of total US tech purchases, but will be more than half of new project tech spending. BT spending goes primarily for software and related tech services, which is one reason those categories are outpacing the other tech categories.
In the other report published today on the US tech market outlook by industry (see "US Tech Spending By Industry, 2014 To 2015 — Which Industries Will Lead The BT Charge?"), we predicted that the chemicals, oil and gas, and utilities industries would see the biggest growth in their tech budget spending in 2014, while media and entertainment firms and financial services firms would lag. We also predicted that the BT agenda would have the most significant impact on tech budgets in industrial products, insurance, and media.