Global IT spending is expected to decline by 7.3% in 2020 — but a “swoop” recovery is on the cards as cash flow improves over the year.
On Monday, Gartner released its latest worldwide IT growth estimates, in which the market is expected to be worth $3.5 trillion by the end of the year, in comparison to roughly $3.8 trillion in 2019.
The latest figures are a revision from May, in which the research agency estimated that the global IT market would be worth $3.4 trillion in 2020.
The novel coronavirus pandemic is far from over. Travel and event restrictions, business disruption, a shift to remote working models, and uncertainty have all played a part in the companies tightening their belts, or going bust altogether.
However, in order to adapt to work from home setups, virtual conferences, and remote operations, some firms have also needed to invest in new equipment and services.
Each major segment of the IT market — including data centers, enterprise software, devices, and both IT and communication services — is expected to experience a decline in spending. Some areas will weather the pandemic slightly better than others, however, with general IT and communications services, alongside enterprise software, suffering the least.
Device growth is predicted to be the hardest hit with a spending decline of 16.1%, followed by a 10.3% reduction in data center investments.
“Working from home caused a temporary spike in device buying as businesses implemented business continuity plans for COVID-19 response, however, spending on devices is not expected to return to 2019 levels soon,” the research agency says.
A backlog of pending IT projects, disrupted or delayed due to the pandemic, is expected to impact operating cash flow as businesses try to get back on their feet. As a result, CIOs may turn towards subscription-based services and cloud technologies rather than opt for in-house technology which requires high up-front costs.
The Infrastructure-as-a-service (IaaS) market is expected to grow by 13.4% to $50.4 billion in 2020, and cloud-based video conferencing tools are also predicted to spike, with spending set to increase by 46.7% over the course of the year.
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In the meantime, IT spending is expected to experience a “swoop” recovery, prompted by a slow return to normalcy and a gradual increase in cash flow, rather than a sudden spike in spending which is expected from the economy at large as lockdown restrictions ease.
“Organizations cannot return to previous processes that are now rendered outdated due to the disruption of their primary revenue stream during the pandemic,” commented Gartner VP John-David Lovelock. “From movie theatres to banks, COVID-19 is forcing all organizations 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.”
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