Information technology (IT) spending in South Africa is forecast to grow by 2.4% year-on-year to R266-billion for this year, technology research firm Gartner has revealed.

Software is predicted to be the best-performing segment, with a 13.2% year-on-year increase.

"South Africa has traditionally underinvested in IT and South African organisations continue to prioritise investments in software, as software spending is how they will catch up with the rest of the world," Gartner VP John David Lovelock said in a statement published on Wednesday.

He pointed out that spending on devices in South Africa is forecast to decline by 4.6% in 2017.

Purchases of devices by businesses and consumers is slowing in the face of rising prices and in the expectation of new products, however, 2018 is set to be a rebound year. 

"Price competition between regional carriers, along with extremely price-sensitive consumers, is preventing substantial growth in spending in this segment, despite an overall increase in mobile device ownership," he said.

Currency fluctuations against the dollar can have a deleterious effect on IT spending in South Africa. The cost of most IT products is based in dollars, which means that local prices in rand must increase enough to cover costs and margins in dollars.

The higher the dollar cost of a product or service, the more volatile the local price is to currency movements.

"Despite a dip against the dollar in the last few weeks, the rand strength against the dollar has been up in 2016 and this will help curb the recent price increases seen on servers, storage and devices," Lovelock noted. 

"South African organisations should learn from their European counterparts. They should embed currency risk into all IT contracts, ensure long-term contracts are priced in rand and seek local delivery, where possible."