Global IT spending is expected to decline 7.3% in 2020, but a recovery is expected as cash flow improves during the year.
Gartner released its latest estimates of global IT industry growth earlier this week, which estimated the market to grow to $ 3.5 trillion by year-end, up from around $ 3.8 trillion in 2019. These figures come to amend forecasts for May , when the institute estimated that the global IT market would represent $ 3.4 trillion in 2020.
The novel coronavirus pandemic is far from over. Travel and event restrictions, disruption of business activities, the shift to remote working models and uncertainty have all contributed to companies tightening their belts or even going bankrupt.
Device growth most affected
However, to adapt to working from home, virtual conferencing and remote operations, some companies have also had to invest in new equipment and services.
Every major segment of the IT market – including data centers, business software, IT and communications devices and services – is expected to experience lower spending. However, some sectors will resist the pandemic a little better than others, with general IT and communication services, alongside business software, being those that will suffer the least.
Device growth is expected to be the hardest hit with a 16.1% drop in spend, followed by a 10.3% reduction in data center investment. “Working from home has caused a temporary rise in device purchases as companies have implemented business continuity plans to respond to Covid-19. However, spending on devices is not expected to return to 2019 levels anytime soon, ”Gartner analyzes.
The cloud market is buoyant
A delay on ongoing IT projects, interrupted 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 could turn to subscription-based services and cloud computing technologies rather than opting for in-house technology that requires high upfront costs.
The infrastructure as a service (IaaS) market is expected to grow 13.4% to $ 50.4 billion in 2020, and cloud-based video conferencing tools are also expected to peak, with spending expected to increase by 46.7% during the year.
In the meantime, IT spending is expected to experience a gradual recovery, driven by a slow return to normal and a gradual increase in cash flow, rather than a sudden spike in spending expected across the board. economy as restrictions ease.
“Organizations cannot revert to earlier processes that are now being rendered obsolete due to the disruption of their primary source of revenue during the pandemic,” commented John-David Lovelock, vice president of Gartner. “From movie theaters to banks, Covid-19 is forcing all organizations to get creative and stay afloat without offering exclusively physical experiences. More specifically, CIOs with less immediate cash should plan to become more digital than they initially anticipated at the start of 2020 ”.