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Worldwide IT spending expected to stumble amid COVID-19

Worldwide IT spending expected to stumble amid COVID-19

Infrastructure and software the only markets forecast to grow

Credit: Ricardo Resende | Unsplash

Worldwide IT spending is expected to decline by 2.7 per cent year-over-year in 2020 due to the coronavirus pandemic, updated forecasts have predicted.

This is despite an increase of demand and usage for specific technologies, according to IDC's Worldwide Blackbook Live Edition for March 2020

Previously, 5.1 per cent year-over-year growth was predicted in January, which was then revised to 4.3 per cent  year-over-year growth in February.

Meanwhile, IT spending in the Asia Pacific region, excluding Japan and China, is expected to grow by 1.2 per cent year-over-year in 2020. With their inclusion, spending in the region is is likely to decline by 2 per cent year-over-year.

The device market is forecast to decline by 8.8 per cent year-over-year with major spending declines predicted for PCs, tablets, mobile phones and peripherals.

The smartphone market in particular is likely to be “significantly” disrupted, as it was previously expected to see strong growth with 5G upgrades, while the PC market was already set to see not-so-stellar growth because of the refresh cycle occurring in 2019.

Amid all the forecast declines, total infrastructure spending, including cloud, is predicted to grow by 5.3 per cent year-over-year and is likely to mainly be sourced from enterprise spending on infrastructure as-a-service (Iaas) and cloud provider spending on servers.

However, server and storage hardware spending and enterprise networking equipment spending are both forecast to decline by 3.3 per cent year-over-year and 1.7 per cent year-over-year, respectively. This is despite the strong demand for cloud services.

Stephen Minton, program vice president of IDC’s Customer Insights & Analysis group, said these hardware spending declines are to be expected in an economic crisis, as hardware spend during these instances is usually reduced.

"In previous economic crashes, IT hardware has tended to overshoot the economic cycle on both the downside and in the recovery phase. That's because underlying demand drivers don't change overnight, but the timing of purchases is shifted and delayed, and this can now be done even more quickly than in the past,” he said.

“What's different now is that cloud is a bigger factor than it was in any previous global recession, and this should mean that overall spending is less volatile than in the last two major IT spending downturns."

Meanwhile, software spending is forecast to grow by just under 2 per cent year-over-year, mostly due to cloud investments and resilient demand for certain categories, with Minton claiming there is still some opportunity to capitalise on this with the rise in remote working and collaboration.

"Organisations that are further along the digital transformation and cloud migration scales are likely to be best-positioned in terms of integrating these technologies into effective and agile response plans," Minton said.

IT services spending is forecast to decline by 2 per cent year-over-year, with project-focused businesses to decline the most as businesses realign their priorities and pause new projects. Both managed and support services spending are also expected to decline.

ICT spending, including telecommunication-related spending, is also forecast to decline by 1.6 per cent year-over-year in 2020 to just under US$4.1 trillion, down from last year’s overall ICT growth of 3.5 per cent year-over-year.

However, this is believed to be less impacted than other markets because of demand for broadband being “extremely” strong — strengthened in part due to ramped up working from home and isolation policies.

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