BackCovid-19 effect: Global IT spend to decline 7% in 2020
The hardest hit segment will be devices as cost containment will continue to reduce spending significantly through 2020IT services market, which comprises almost a third of global IT spending, will see a 6.8% decline in 2020
PremiumMUMBAI: Worldwide spending on information technology is likely to total $3.5 trillion in 2020, down 7.3% from last year, according to the latest forecast by Gartner, Inc.
While the global economy is expected to witness a ‘swoosh’ recovery from the covid-19 pandemic, IT spending will experience more of a ‘swoop’ recovery, said the research firm. The hardest hit segment will be devices as cost containment will continue to reduce spending significantly through 2020.
Spending on devices is likely to decline 16.1% in 2020 and is not expected to return to 2019 levels soon. Working from home has led to a a temporary spike in device buying as companies implemented business continuity plans in response to covid-19.
Gartner sees the pandemic response in three phases. As organisations enter the second phase - recover - they will have a backlog of IT projects and less cash to use. As a result, companies will gravitate toward spending on subscription products and cloud services to lower upfront costs. Infrastructure-as-a-service (IaaS) is expected to grow 13.4% to $50.4 billion in 2020 and 27.6% to $64.3 billion in 2021.
“Overall IT spending is still expected to sharply decline in 2020 but will recover in a faster and smoother manner than the economy," said John-David Lovelock, distinguished research vice president at Gartner. “Still, organisations cannot return to previous processes that are now rendered outdated due to the disruption of their primary revenue stream during the pandemic. This pause and restart will push growth out of 2020 and into 2021."
IT services market, which comprises almost a third of global IT spending, will see a 6.8% decline in 2020, said the report. It is expected to recover and grow 5.5% in 2021.
Ongoing workplace collaboration requirements will fuel sustained end-user spending in cloud-based conferencing, which is projected to increase 46.7% in 2020, according to the latest forecast. Indian IT companies have already started offering work-based communication and remote working solutions to clients as a means to offset the demand hit due to the pandemic.
“With the easing of lockdown restrictions, many businesses will soon return to a higher level of revenue certainty allowing some cash flow restrictions to ease and CIOs to resume spending on IT again," said Lovelock.
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