IT spend in Australia: Where the money will go in 2022

What the top three ICT research firms predict for IT spending in Australia and how software spending is driving overall IT investment growth.

IT spending in Australia is set to continue to grow in 2022. Most research firms agree that the market slowed down in 2020 with the first wave of the COVID-19 pandemic and the resulting lockdowns, even though there was an increase in sales of computers and peripherals. In 2021, things improved as spending returned—even, according to some research firms, getting better than before the pandemic.

The variation in values is likely due to the different approaches by the various research firms to work out their predictions and also based on the number of businesses surveyed. What they all agree on is what is growing faster and what enterprise spending will look like in 2022.

Enterprise software spending in Australia

According to a recent report from Forrester, spending in software in Australia will grow by 9.8% in 2022, reaching $23 billion. Software will enjoy the largest growth compared to computers and peripherals, communications equipment, IT consulting, and IT outsourcing.

A study from Gartner published in January 2022 predicts a higher growth of 14.9%, with spending surpassing $27 billion.

IDC also predicts a 9.7% growth, for a total of $20.1 billion. The firm says overall ICT spend maintains good momentum as Australian organisations continue to progress in digitally transforming their business. “Software spending will see the biggest increase in spending, as the market expands the use of software to enable more streamlined business operations and drive innovation, at the same time continue to shift towards a cloud-centric consumption model,” IDC analyst John Feng tells Computerworld Australia.

Software spending is the most significant across the three researchers’ reports. The software category includes software as a service and is the driver of the overall IT spending growth expected for the year.

IT services and outsourcing spending in Australia

Gartner predicts that IT services will see the second-highest spending in 2022, with a 6.1% growth rate resulting in $39.2 billion of spend. The expected increase in investment in IT services, which includes business and technology consulting, is due to an increased reliance on external consultants as organisations rush to not fall behind in digital improvements.

IT consulting services and IT outsourcing, which Forrester measures separately, will also see solid increases, expanding by 7.2% and 6.7%, respectively. Forrester predicts a combined total spend across these two areas of $29 billion in 2022: $10 billion in IT consulting and $19 billion in outsourcing.

IDC has a more moderate prediction of 3.8% for IT services spend, which it expects to reach $21.7 billion in 2022. However, IDC measures business services as separate group, for which it predicts a 3.5% increase, totalling $14.6 billion.

Hardware and devices spending in Australia

This is where the data differs the most, again likely due to different methodologies and survey reach. For example, one researcher may consider only desktops and laptops as computing devices, whereas another may count tablets and peripherals. Nonetheless, they all agree that spending on hardware is falling.

In 2020, IDC found the Australian sales of laptops, desktops, and workstations grew 11.8% that year, driven mostly by an increase in consumer buying. According to IDC’s Quarterly Personal Computing Devices Tracker, a total of 4.9 million computers were purchased in Australia in 2020.

For 2022, IDC expects spending in technology hardware to reach just over $28 billion, or just less than a 1% decrease compared to 2021. “Hardware spending in 2022 is expected to decrease slightly, because organisations would have made the investment in 2020-2021 responding to pandemic disruptions and will be focusing on getting the value out of their existing hardware investment,” Feng says.

Gartner’s data shows a 2.4% increase in 2022 spending on devices (excluding communications), but that is a considerable drop from 2021’s 11.5% increase. Gartner predicts a 5.5% drop for 2023.

Forrester says that, following the epic surge in 2021, hardware investment will soften to prepandemic levels, edging up by just 1% in 2022. The research firm predicts a total spending of $7 billion for 2022 in computers and peripheral equipment.

Steady growth ahead as Australian tech industry matures

Despite having different numbers, the three researchers’ percentages of growth or decrease are all very similar. The change prompted by COVID-19 seems to have propelled the local industry forward faster than it had been going.

According to Forrester, Australia’s tech industry has finally matured into a global force. Local leadership has help catalyse that maturity, Forrester’s report says: “Local tech billionaires and unicorn founders including Atlassian’s Scott Farquhar and Canva’s Cliff Obrecht have banded together with industry leaders to form the Tech Council of Australia (TCA). TCA aims to spur new ways of local tech investment and create 1 million new technology jobs. This kind of reinvestment based on global success stories is likely to help lift Australia’s local spending out of its average 2% to 3% average growth to attain new heights.”


Copyright © 2022 IDG Communications, Inc.

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