Despite some increasing demand in certain segments, analyst firm says IT spending will suffer from economic consequences of COVID-19
COVID-19 will sharply cut into global IT spending as businesses and individuals cut their spending to compensate for the economic losses due to the pandemic and containment consequences, says analyst firm IDC.
The Lowdown: In a newly released forecast, IDC says global spending on general IT products and services will decline at least 2.7% in 2020 due to deteriorating economic conditions. Previous forecasts from before the pandemic had IT spending expanding 4.3% to 5.1% for the year.
The Details: IDC says the negative forecast comes even as demand for certain IT products and services increased during the initial “work from home” surge. While the anticipated recovery in the second half of the year will lift the numbers, it won’t be enough to push the forecast back into the black.
Spending on devices such as personal computers and tablets will fall by 8.8% for the year. Device sales were forecast to increase less than 1% prior to the pandemic; the anemic rate is due to the Windows 7 refresh cycle coming to an end.
Storage and server spending will decline by 3.3% and enterprise networking sales will fall 1.7% as businesses shift their infrastructure spending to cloud services and infrastructure as a service. Overall, infrastructure spending will increase by 5.3%, but that’s less than the pre-pandemic forecast of 8.8%.
Software spending will increase by 1.7%, down from the previous forecast of 10%, as businesses will continue to invest in automation, cloud-based resources, and applications critical to business operations.
IT services will decline by 2% as businesses pause on new development and integration projects. Managed services will decline commensurate with declines in device and hardware spending.
While the 2020 IDC IT spending forecast is bleak, there is light at the end of the COVID-19 pandemic. IDC predicts IT spending will increase by 4.9% in 2021 as regional and global economies come back to life.
The Impact: COVID-19 is taking a terrible toll on economies around the world, dragging down spending in all sectors and dampening once healthy and growing economies. Bank of America says the overall economic forecast is worse than anything on record. The IDC IT spending forecast is a telling sign that the IT vendor and channel communities will feel the impact of the COVID-19 economic downturn.
The Buzz: “Overall IT spending will decline in 2020, despite increased demand and usage for some technologies and services by individual companies and consumers,” said Stephen Minton, program vice president at IDC’s Customer Insights & Analysis group. “Businesses in sectors of the economy that are hardest hit during the first half of the year will react by delaying some purchases and projects, and the lack of visibility related to medical factors will ensure that many organizations take an extremely cautious approach when it comes to budget contingency planning in the near term.”