We have just published Forrester's semi-annual global tech market outlook report for 2015 and 2016 (see "The Global Tech Market Outlook For 2015 To 2016 — Five Themes That Will Define The Tech Market"). In this report, we are projecting growth of 4.1% in 2015 and 6.3% in 2016 business and government purchases of computer and communications equipment, software, and tech consulting and outsourcing services measured in US dollars. These growth rates are distinct improvements over the 2.3% growth in 2014. The strong dollar is a key negative factor in these forecasts; measured in local currency terms, the growth track for the global tech market is higher with a gentler upward slope, from 3.3% in 2014 to 5.3% in 2015 and 5.9% in 2016.
Our global tech market outlook can be defined with five main themes:
- Moderate 5% to 6% rates in 2015 and 2016 in local currency terms. While a stronger-than-expected US dollar has resulted in lower dollar-denominated growth rates for 2014 and 2015 than in our August 2014 projections, though a stronger-than-expected US dollar both years caused a downward revision in these growth rates.
- The US tech market will set the pace for the rest of the world in 2015 and 2016. Not only does the US have the largest country-level tech market by far, it will have one of the fastest growth rates at 6.3% in 2015 and 6.1% in 2016. US businesses and governments are also leaders in adopting new mobile, cloud, and analytics technologies. Among other large tech markets, China, India, Sweden, and Israel will also have strong tech market growth, while Brazil, Mexico, Japan, and especially Russia will lag.
- New project spending will rise, but MOOSE spending still dominates. Tech purchases consist of two parts: 1) spending for new tech projects and initiatives and 2) spending to maintain and operate the tech organization, systems, and equipment, or what Forrester calls tech MOOSE. In recent years, the growth in new project spending has been modest, as firms held back in launching major new tech projects due to uncertain business outlooks. However, we expect that new project spending will rise in many countries in 2015 and 2016.
- A focus on revenues will drive business technology investment. Forrester has defined business technology (BT) as technology, systems, and processes to win, serve, and retain customers. BT is gaining prominence, especially in countries like the US where firms have increasing confidence in their business outlook and thus are focused on increasing revenues rather than cutting costs.
- Software and services rule; hardware and outsourcing stew. New mobile, cloud, and analytics technologies are tilting the tech market away from hardware and classic outsourcing, and toward software and related services.