Home Technology Global IT spending to contract by 7.3% in 2020

Global IT spending to contract by 7.3% in 2020

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A leading US research firm has predicted that worldwide IT spending will contract in 2020, amid a global pandemic that has seen heightened demand for IT services as the workforce embedded itself in home offices.

Global IT spending is projected to total $3.5 trillion in 2020, according to American research firm Gartner, which would represent a decline of 7.3 per cent from 2019’s spending levels.

All segments of IT spending are set to decline due to firms seeking to minimise expenditure, with devices being the hardest hit with a 16.1 per cent projected decrease in spending, despite a brief spike in demand due to the rise in remote working caused by global lockdowns.

Data centre systems are anticipated to see a drop of 10.3 per cent in spending and IT services, enterprise software and communications services are set to suffer declines of 6.8 per cent, 5.7 per cent and 3.3 per cent respectively.

“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, 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“Still, organisations cannot return to previous processes that are now rendered outdated due to the disruption of their primary revenue stream during the pandemic.

“From movie theatres to banks, Covid-19 is forcing all organisations to get creative and stay afloat without exclusively offering physical experiences.  Specifically, CIOs with less immediate cash on hand should plan on becoming more digital than they had originally anticipated at the start of 2020.”

Companies are now entering the second of three defined phases of pandemic response as seen by Gartner: the “recovery” phase, and will have a backlog of IT projects to clear, but less money to fund them.  CIOs are expected to shift their spending towards subscription products and cloud services as a result to reduce costs.

Spending on cloud-based conferencing is projected to grow by 46.7 per cent in 2020, while infrastructure-as-a-service (IaaS) is forecasted to see growth of 13.4 per cent, to $50.4 billion, in 2020.

“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 Mr Lovelock. “This pause and restart will push growth out of 2020 and into 2021.

“The smooth ‘swoop’ recovery of top line IT spending masks a very turbulent recovery across some countries, industries and markets.”

16th July 2020.

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