If you're a CTO or CIO that has escalated your organization's move to the cloud, then clearly you're not alone. Worldwide spending on public cloud services and infrastructure is forecast to reach $160 billion in 2018 — that's an increase of 23.2 percent over 2017, according to the latest market study by International Data Corporation (IDC).

Although annual spending growth is expected to slow somewhat over the 2016-2021 forecast period, the market is forecast to achieve a five-year compound annual growth rate (CAGR) of 21.9 percent with public cloud services spending totaling $277 billion in 2021.

Public cloud services market development

The industries that are forecast to spend the most on public cloud services in 2018 are discrete manufacturing ($19.7 billion), professional services ($18.1 billion), and banking ($16.7 billion). The process manufacturing and retail industries are also expected to spend more than $10 billion each on public cloud services in 2018.

These five industries will remain at the top in 2021 due to their continued investment in public cloud solutions. The industries that will see the fastest spending growth over the five-year forecast period are professional services (24.4 percent CAGR), telecommunications (23.3 percent CAGR), and banking (23 percent CAGR).

Software as a service (SaaS) will be the largest cloud computing category, capturing nearly two thirds of all public cloud spending in 2018. SaaS spending, which is comprised of applications and system infrastructure software (SIS), will be dominated by applications purchases, which will make up more than half of all public cloud services spending through 2019.

Enterprise resource management (ERM) applications and customer relationship management (CRM) applications will see the most spending in 2018, followed by collaborative applications and content applications.

Infrastructure as a service (IaaS) will be the second largest category of public cloud spending in 2018, followed by Platform as a service (PaaS). IaaS spending will be fairly balanced throughout the forecast with server spending trending slightly ahead of storage spending.

PaaS spending will be led by data management software, which will see the fastest spending growth (38.1 percent CAGR) over the forecast period. Application platforms, integration and orchestration middleware, and data access, analysis and delivery applications will also see healthy spending levels in 2018 and beyond.

The United States will be the largest country market for public cloud services in 2018 with its $97 billion accounting for more than 60 percent of worldwide spending. The United Kingdom and Germany will lead public cloud spending in Western Europe at $7.9 billion and $7.4 billion respectively, while Japan and China will round out the top 5 countries in 2018 with spending of $5.8 billion and $5.4 billion, respectively.

China will experience the fastest growth in public cloud services spending over the five-year forecast period (43.2 percent CAGR), enabling it to leap ahead of the UK, Germany, and Japan into the number 2 position in 2021. Argentina (39.4 percent CAGR), India (38.9 percent CAGR), and Brazil (37.1 percent CAGR) will also experience particularly strong spending growth.

Outlook for cloud adoption by industry

The U.S. industries that will spend the most on public cloud services in 2018 are discrete manufacturing, professional services, and banking. Together, these three industries will account for roughly one third of all U.S. public cloud services spending this year.

In the UK, the top three industries (banking, retail, and discrete manufacturing) will provide more than 40 percent of all public cloud spending in 2018, while discrete manufacturing, professional services, and process manufacturing will account for more than 40 percent of public cloud spending in Germany.

In Japan, the professional services, discrete manufacturing, and process manufacturing industries will deliver more than 43 percent of all public cloud services. The professional services, discrete manufacturing, and banking industries will represent more than 40 percent of China's public cloud services spending in 2018.

"Digital transformation is driving multi-cloud and hybrid environments for enterprises to create a more agile and cost-effective IT environment in the Asia-Pacific region," said Ashutosh Bisht, research manager at IDC. "Even heavily regulated industries are using SaaS for non-core functionality, platform as a service (PaaS) for app development and testing, and IaaS for workload trial runs and testing for their new service offerings."