IDC: Worldwide IT Spending to Decline by 2.7% in 2020 due to COVID-19

Published On: April 20, 2020Categories: Buzz, Uncategorized

Worldwide IT spending is now expected to decline 2.7% this year as COVID-19 impacts the global economy and forces many organizations to enact immediate contingency strategies. According to a report by market researcher IDC, spending on hardware, software, and IT services is likely to decline by more than real GDP overall, as commercial IT buyers and consumers implement rapid cuts to capital spending in line with declining revenues, profits, market valuations, and employee headcounts.

“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 in 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.”

Major spending declines this year are now expected in PCs, tablets, mobile phones, and peripherals with overall devices spending expected to decline by 8.8% in constant currency terms. The PC market was already expected to decline on the back of a strong Windows-driven refresh cycle in 2019, but the crisis will significantly disrupt a smartphone market that was projected to post stronger returns this year as a result of 5G upgrades.

Spending on server/storage and network hardware are also expected to decline despite strong demand for cloud services as enterprise customers delay purchases during the initial rapid response phase of the current crisis. Total infrastructure spending (including cloud) will likely increase by 5.3%, but all of this growth will come from enterprise spending on infrastructure as a service (IaaS) and cloud provider spending on servers. Meanwhile, overall server/storage hardware spending are expected to decrease by 3.3% and enterprise network equipment spending will decline by 1.7%.

IT services spending is expected to decline by 2% in 2020, with the worst declines in project-oriented services as organizations delay major new projects until business visibility improves. Spending on managed services and support services will also decline, in line with overall IT activities and hardware/software deployments, according to IDC.

Including telecom and other spending, total ICT spending is expected to decline by 1.6% to just under $4.1 trillion. This compares to overall ICT growth of 3.5% last year, when IT spending increased by almost 5%.

On the bright side, the researcher predicts that software will post positive growth of just under 2% overall, largely due to cloud investments along with some resilient demand for specific categories, which will be a component of response measures or are integral to ongoing business operations.

Channel Impact®
The pandemic has brought about substantial change in strategies and spending habits as businesses hunker-down in anticipation of an eventual return to normalcy.

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