Forrester has released a report detailing the fastest growing aspects of the global technology market, with software and IT services forecasted to show the most gains in the year ahead. According to Forrester’s predictions, software will grow by 10.5% in 2022 and IT services are expected to see a bump of 6.8%.
Forrester’s report analyzes the tech market growth areas in the year ahead, as well as the areas of the world in which the technology will see the biggest advancement in value.
Market growth expectations
As Microsoft’s value grew 20% due to record-low interest rates and central bank liquidity injections to offset the effects of the COVID-19 pandemic, Microsoft alone is expected to see an increase of 13% over the next two years largely due to their cloud services, according to Forrester’s predictions. Cloud service providers like Microsoft Azure, Amazon Web Services and Google Cloud additionally saw a 40% hike within the last 12 months alone. Of the three services, Azure has taken a larger share of incremental spending, and with this has been outperforming its competitors in the cloud service market.
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Now more than ever, IT executives are looking to make the cloud a go-to for their enterprises’ data storage needs, as those whose organizations are planning on migrating to the cloud plan to have 58% of their application portfolio on the cloud in two years’ time, and 43% of IT decision-makers companies have already migrated to the cloud. Public cloud spending is expected to more than double within the next three years according to Forrester, with a minimal number of non-critical operations not in or planning to migrate to the cloud.
The other big gainer in the tech market is expected to be IT services, largely in part to the move to remote and hybrid work implementations during the pandemic. These IT services are expected to grow significantly compared with the levels of growth pre-pandemic, specifically in the areas of data privacy, software security and data management services. In this arena, Accenture, Wipro and Infosys were the biggest gainers over the past year with revenue growth rates of 21%, 18% and 14%, respectively.
Elsewhere, communications equipment is slated to see 4% growth despite supply chain disruptions that have arisen due to the pandemic, largely due to the lack of available components, while computers and peripheral equipment (2.3%) and telecommunications services (2%) round out the fastest growers within the tech market. A surge within computers and peripheral equipment has also been stunted due to the chip shortage and telecoms is expected to decline from 6.5% growth in 2021.
Tech spending forecasts in North America and Asia
North America is expected to be the biggest tech spender in 2022, as the U.S. captures 41% of tech spending this year across the top-40 markets of Forrester’s Global Tech Outlook. With the U.S.’s economy adjusted for inflation, the country’s real GDP is expected to see an increase of 3.6% in the year ahead. The areas of financial services, professional services, government, media and information, telecommunications and data processing and insurance are all expected to see strong production in 2022, although one potential setback noted in the study cites high interest rates as a potential hurdle for interest in tech stocks.
Asia is expected to nearly see as much growth as North America is as China represents a large share of its economy from in-house software development and technology exports. China’s digital economy is anticipated to impact half of the country’s GDP, an increase of 11% from 2021. More than 80% of China’s tech spending is thought to come from in-house developments, exports, partnership and embedded software development according to Forrester, despite the strain of the U.S. placing Chinese companies on its import blacklist in December of last year. Elsewhere in Asia, India is the largest offshoring destination for IT companies, as its tech exports are three times more than what it spends.
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Vendors in the year ahead
Forrester also expects vendors to expand their products and services outside their traditional markets by diving into the software-as-a-service (SaaS) revolution and investing in renewable energy through technology. This growth in the areas of software, cloud and IT services and green energy is anticipated to refocus tech investments as a whole. With Dell as an example of one company moving beyond its traditional market of servers, peripherals storage, and networking, large enterprises will be looking to double its addressable market through infrastructure-as-a-service technologies.
With green energy as another focus for vendors, the cost of power generation through solar panels, LED bulbs and lithium ion batteries has been in free-fall over the past 10 years, allowing for a unique opportunity to pivot to the cheapest method of power generation. For several companies, renewable energy has already become a focus due to its low costs and Forrester expects the number of enterprises investing in renewable energy to continue to grow in the year ahead as tech vendors look for more efficient ways to power their products. Everything from automobiles to mobile phones are on the table for a green energy revolution, and Forrester expects renewable energy to be a large focus moving forward.