IT spending by SMBs to grow 5% to $602 bn in 2018

IT spending
IT research company IDC has revealed the forecast on IT spending by SMBs for 2018 and 2021.

IT spending by small and medium-size businesses will grow 4.9 percent to nearly $602 billion in 2018.

IT spending by SMBs (businesses with fewer than 1,000 employees) is expected to reach $684 billion on in 2021, at a CAGR of 4.7 percent for the 2016-2021 forecast period, IDC forecasts.

Mid-market firms will account for the largest share of total SMB IT spending though they are farther along in technology deployment than small businesses.

Firms with 100-999 employees will drive over two thirds of global SMB IT spending through 2021.

Medium-sized businesses with 100-499 employees will make IT spending of $229 billion this year.

Large businesses with 500-999 employees will be spending $182 billion on IT.

Main IT spending regions

United States $186 billion
China $56 billion
Germany $37 billion
UK $36 billion
Japan $35 billion

Fastest IT spending growth

Peru 11.7 percent CAGR
Chile 11.6 percent CAGR
Indonesia 11.2 percent CAGR
China 7 percent CAGR
India 7 percent CAGR

Hardware, software, and IT services will each account for around 30 percent of total SMB spending in 2018 with business services delivering the balance.

Hardware, which is currently the largest category of IT spending, will be overtaken by software in 2019 and IT services in 2021.

Software will experience the fastest spending growth over the 2016-2021 forecast with a CAGR of 7.5 percent, followed by business services with a CAGR of 6.6 percent.

“While SMBs, especially smaller ones, have tactical needs to sharpen performance, they are also looking to coordinate resources in a meaningful way. For many this will be an important step in their Digital Transformation (DX),” Ray Boggs, vice president, SMB Research at IDC, said.

Devices will be the largest category of technology spending in 2018. SMBs will be allocating $115 billion to personal computing devices, peripherals, and mobile phones.

Applications will be the second largest spending category at $99 billion, led by investments in enterprise resource management (ERM), content applications, and customer relationship management (CRM).

Content applications will grow at CAGR of 10.6 percent over the five-year forecast.

CRM will grow at CAGR of 10 percent over the five-year forecast.

Collaborative applications will achieve 12.2 percent CAGR.

Technology outsourcing and project oriented outsourcing, the next two largest technology categories in 2018, will support SMB efforts to implement these new investments in pursuit of their DX strategies.