Information and Communications Technology Market
Information and Communications Technology (ICT) is a growing industry. Thanks to growth in new technologies, the industry is expected to see steady growth in the coming years. Below is a summary of key findings on market insights, industry trends and players in the market.
- Of the $4.3 trillion spending cited in the initial research, $2.7 trillion is in commercial and public sector spending, with the rest made up by consumer spending in 2020.
- Of all commercial spending, 40% is accounted for by four industries: banking, discrete manufacturing, professional services, and telecommunications. IT services account for signification portions within these industries--ranging from 50% in banking to 26% in professional services.
- Professional services and media industries will see the fastest growth in ICT spending with 7.2% and 6.6% CAGR, respectively, over the 2019-2023 forecast.
- In 2020, telecommunications services account for more than one third of all ICT spending.
- Consumer spending is projected to grow at a low CAGR of 0.7% and gradually losing share over the 2019-2023 forecast period.
Traditional Technologies Growing Steadily
- Growth in spending on traditional ICT is projected to track GDP growth throughout this decade.
- Legacy categories are declining in revenue as spending on ICT is narrowly focused on a selection of platforms. However, traditional technologies overall remain major components of digital strategies for businesses.
- Growth in traditional hardware, software and services is forecast to be largely driven by cloud and mobile. It is expected to maintain a stable share of overall business and consumer spending.
- Over the next few years, growth in traditional ICT will be driven by only four platforms: cloud, mobile, social and big data/analytics.
- While the overall ICT grew by 5% last year, traditional ICT grew by 3% for the same period.
New Technologies Growing Rapidly and Grabbing Larger Market Share
- New technologies are growing at a double-digit rate and beginning to account for a larger share of the market, with 2019 seeing an estimated growth rate of 16%.
- Thanks to the rapid growth of Internet of things (IoT), annual revenue in new technologies is approaching $1 trillion.
- Emerging categories, such as robots/drones and AR/VR headsets, are projected to see similar growth over the next few years.
- The emergence of new technologies is also driving growth for traditional technologies. For example, spending on traditional server and storage is now driven by workloads related to the deployment of new technologies.
- Accounting for about 20% of global spending on ICT, new technologies are projected to reach over 25% of all ICT spending in 2022.
COVID-19 Impacting the Industry
- The ICT has suffered considerable losses in the first quarter of this year due to COVID-19. However, it is projected to make a comeback with an average industry growth rate of 7-8% by the end of 2020.
- Hardware and IT services have lost nearly 4% in revenue in the first quarter and are not expected to recover in the next two or three quarters.
- Due to a decline in manufacturing capacity in China, the ICT industry has also suffered from supply chain disruption. It is not clear yet when there will be a complete revival of operations.
- The telecommunications sector, on the other hand, has benefited from the social distancing measures and seen a surge across the globe.
- New business opportunities are expected to emerge as consumer behavior, methods of communications and work patterns are changing due to the pandemic.
Digital Transformation Driving Growth
- Digital transformation is set to drive growth over the next five to ten years and continue to generate steady demand.
- According to Ovum's global study of 6,600 enterprises, digital transformation drove nearly three quarters (73%) of enterprises to increase ICT spending in 2018. The percentage of enterprises expected to make a significant increase (6% or more) in ICT budget rose from 12% in 2018 to 31% in 2019.
- The strongest growth, the study finds, is seen in the financial sector, with nearly 40% planning a significant budget increase.
- International Data Corporation (IDC) forecasts a 51% share of global IT budget going to spending on digital transformation by 2024.
- With the rise of digital lifestyles, businesses have to catch up to more complicated consumer behavior, higher consumer expectations and wider consumer choices. The future of business is "digital first," according to IDC.
Emerging Technologies Driving New Opportunities
- Among the emerging trends in recent years are artificial intelligence (AI), blockchain, IoT and 5G--to name a few.
- AI in particular may be employed to identify new product or service opportunities for businesses. With the full capacities of AI in communications and consumer insights among other things, solution providers can tailor solutions to meet business demands.
- According to a report by Research and Markets, AI is expected to fundamentally shift ICT performance in various segments, from marketing and decision-making to workplace automation.
- In addition, AI and 5G combination is expected to have great economic and social benefits. For example, Ericsson claims that its AI-powered RAN enables up to 25% more 5G coverage with advanced traffic management.
- Systems integration is expected to bring together many technologies, from machine learning to network function virtualization (NFV), in an interdisciplinary approach.
- Mind Commerce projects the global market for AI-driven networking solutions to reach $5.8 billion by 2023.
- According to Mind Commerce, the current AI segment is fragmented, focusing on silo approaches. There is a need for general purpose AI in a more integrated approach.
- Furthermore, the rise of 5G and other technologies brings about new security concerns. Thus, there is a need for risk management systems that go beyond traditional cybersecurity, with a more comprehensive approach that takes into account security, privacy and decision-making.
Democratization of Technology Enhancing Access and Changing Business
- Gartner identifies democratization of technology as one of the top ten trends in 2020. What this means is people now have easy access to technical expertise.
- This enhanced access is seen in four areas--application development, data and analytics, design, and knowledge--also known as "citizen access." This leads to the rise of the number of people without extensive training who are able to program or generate data models, thanks to AI-driven development to generate code and automate testing.
- Furthermore, technology is viewed as a great equalizer when it comes to experience and expertise. With enhanced access, democratization of technology is expected to disrupt computer and data science education as it levels the playing field in terms of skills.
- This will result in an increase in adoption of data analytics and AI across many organizations, with citizen access fueling the explosion of "software-defined everything."
- Examples of democratization of technology in action include open source AI such as OpenAI, Tensorflow, Apache SystemML, OpenCog, Microsoft Cognitive Toolkit, AI Explainability 360 Open Source Toolkit, and CAPTCHA solving kits.
ICT Shifting From Manufacturing to Services
- According to Brookings Institute, the shift from manufacturing sector to service sector has occurred in ICT. This is a move from hardware to software-centreic growth.
- The shift is particularly pronounced in developing countries, thanks to deeper and wider mobile-cellular networks.
- Asia, however, still holds the largest market share for traditional hardware. IDC predicts that it will take some time for some regions to catch up with developed economies in adopting some technologies, particularly the software-driven ones.
- IDC's projected data from 2016 to 2022 shows that hardware overall is slowly losing its share while software and services together are making steady growth (see graph here).
Selected Market Research Reports (in preference order)
- IDC's subscription-based Worldwide ICT Spending Guide offers annual five-year forecasts by country, technology, industry, and company size delivered twice a year. It also provides insights on industry players, IT suppliers and investors/financial firms. This option is likely to provide the most up-to-date and detailed data for the market--highly recommended.
- A market research report by MRS Research Group provides analysis and forecast for 2019-2026. It offers analysis on market segments, industry trends, key players and regions.
- Another option is "Information and Communication Technology Industry Amid Global COVID-19 Crisis" report by Meticulous Research. The report provides current insights on the industry.
Lists of Players in the Market
Forbes 50 Global ICT Companies
- Forbes provides a list of 50 global ICT companies, categorize by the way they offer value to customers. The new method of categorization is due to the increasingly blurring line among the old categories in the industry. The new categories are category leaders, consolidators, innovators, solution customizers and value players. Note that one company may fall into two of these categories (as primary and secondary alignment).
- Category leaders are those focusing on building dominance in a relatively narrow product or service category in order to influence the supply markets, sales and delivery channels in that category. These companies are identified by their positioning strategies for products and services.
- Companies that fall within this category are (in alphabetical order) Accenture, Adobe, Amazon, Cisco, Computer Associates, EMC, Fujitsu, HCL Technologies, IBM, NEC, Orange, Salesforce, Symantac, Verizon, Wipro, Xerox and ZTE.
- Consolidators are identified by their repeated acquisitions. These companies leverage consolidation to provide consumers with access to a range of products and services or to offer a product lineup that could not be assembled in any other way.
- This category includes Adobe, Alibaba, Alphabet (Google), Amadeus, Canon, CenturyLink, CGI Group, Computer Associates, EMC, Intel, Microsoft, Netapp, Oracle, Qualcomm, Salesforce, SAP, Softbank and Symantac.
- Innovators are those develop and innovate new products or services in the market. These companies are identified by their R&D investment strategies.
- Companies in this category are ADP, Alcatel-Lucent, Alibaba, Alphabet, Amadeus, Amazon, Apple, AT&T, BT Group, Canon, Cisco, Deutsche Telekom, Ericsson, Hewlett-Packard, Hitachi, Intel, Microsoft, NTT, Nokia, Oracle, Ricoh, Samsung, Telefonica and ZTE.
- Solution customizers are those that leverage insight and market intelligence to offer tailored products or services that address customers’ specific needs. These companies are identified by the share of revenue driven from activities such as solutions consulting, outsourcing and implementation services.
- This category includes AT&T, Atos, BT Group, Cap Gemini, CenturyLink, Cognizant, CSC, Deutsche Telekom, Fujitsu, HCL Technologies, Hewlett-Packard, Hitachi, IBM, Infosys, NEC, NTT, Orange, Ricoh, Samsung, Tata Consultancy Svc, Verizon, Wipro and Xerox.
- Value Players are those who provide low cost for competitive products or services. These companies are identified by the share of total revenue from commoditized products and services driven by economies of scale.
- Companies in this category are Accenture, ADP, Alcatel-Lucent, Apple, Atos, Cap Gemini, CGI Group, Cognizant, CSC, Ericsson, Infosys, Nokia, Netapp, Qualcomm, SAP, Softbank, Tata Consultancy Svc and Telefonica.
- A similar list of best-performing 50 companies, though published years earlier (2014) by Consultancy.uk with more traditional categorization, may be found here.
Thomson Reuters Top 100 Global Tech Leaders
- Thomson Reuters has also developed its own list of top 100 global tech leaders.
- The companies are selected based on Thomson Reuters's probabilistic programming techniques. The methodology analyzes 28 factors across eight performance pillars.
- These performance pillars are management and investor confidence, legal compliance, financial performance, innovation, risk and resilience, people and social responsibility, reputation, and environmental impact.
- While there is a lot of overlapping between this list and the one compiled by Forbes, Thomson Reuters list appears to cover companies more broadly. The full list (in alphabetical order) may be found here.
- IBM tops the list of best-performing companies and appear in both Forbes top 50 and Thomson Reuters 100.
- It is identified as a category leader by Forbes, focusing its activities on establishing a high level of control over a relatively small subsector.
- Forbes also identifies it as an innovator. This is echoed by Fast Company, putting it as one of the most innovative companies.
- Shifting from computer production, IBM is now focusing on services such as cloud computing and data analytics.
- Moving to real-world, consumer-centric applications, the company could gain a reputation as a data company instead of a computer company. Its business in weather data alone generates $500 billion worth of annual commerce.
- Earlier this year, IBM announced its simplified storage offerings. Its storage business remains focused on supporting enterprise customers including the largest, most regulated and security conscious users. Details of the new offerings may be found here.
- Its cloud pricing options include lite, pay-as-you-go, reserved instances and subscription, with lite being the beginner's option. Details on pricing for cloud and other products may be found here.
- Present in all three lists mentioned above, Accenture is a category leader and a value player.
- The company concentrates on large-scale process re-engineering and solution integration, investing in customer interfaces related to those fields, to become a leader in the category.
- Accenture is the only consulting firm making it to the top ten of the best-performing ICT companies.
- Its revenue from communications, media and technology is $2.24 billion for the three-month period ended on February 29, 2020, accounting for 20% of total revenue for that period.
- According to Data Economy, the company's solid performance for this period is largely driven by expansion in cloud services and other vertical technologies.
- Accenture's selling point is delivering value for enterprise transformation with innovative technology services and deep industry experience.
- Some of its services include cloud, data management and partnership key ICT players such as Oracle, SAP and Salesforce. Pricing information is not publicly available.
- One of its cloud offerings is MyNav, a unique cloud platform that helps organization design and simulate different cloud solutions to identify the ones that best fit specific business requirements.
- Also on the best-performing list, SAP is also among Thomas Reuters top 100 and Forbes Top 50. Forbes identifies SAP as a consolidator and a value player.
- In achieving its title as a consolidator, SAP "has consolidated a portfolio of enterprise SaaS solutions that complement its original ERP core, including procurement (Ariba), corporate travel (Concur), HR (SuccessFactors), work management (Fieldglass), and e-commerce (Hybris)."
- As a consolidator, SAP prides itself as a leader across all categories, from ERP and digital core to analytics.
- In line with the industry trend, SAP has also shifted its focus from traditional software to cloud. It ranks fifth in the Cloud Wars Top Ten Rankings.
- According to its first quarter report of this year, its cloud revenue is 4.5 times higher than its traditional license revenue, with cloud revenue reaching $2.2 billion and software license revenue reaching $490 million for the reporting quarter.
- SAP offers consumption-based and subscription-based pricing options for its cloud platform, with prices going up to over $7,500. Details may be found here.
To carry out this research, we gathered information and data on market insights mainly from IDC. We tracked top articles by industry experts to collect commonly cited industry trends and ran them against the information and data provided by IDC to select the top trends. As for the list of players in the market, we selected three lists: top 50 by Forbes, top 100 by Thomson Reuters and a list 50 best-performing ICT companies. Although these lists mostly overlap with each other, we hoped to provide as many players as possible. While there are thousands of firms in the space, we were unable to put them all in one list due to some categorization issues (for example, some databases include firms that invest in technology although they are financial firms and do not offer ICT products). As for the top three players highlighted in this research, we selected them based on their presence on all three lists and how they vary from each other--for example, since we selected IBM (for topping the best-performing list), we chose not to highlight Microsoft as the two are similar and instead we picked Accenture (for being consulting firm) and SAP (for its wide range of products).