Global spending on Information Technology (IT) is expected to decline by about 2.7% in terms of constant currency despite increasing demand and usage for some technologies and services. This is according to a recent forecast released by the International Data Corporation (IDC)
The decline is attributed to the impact of the COVID-19 pandemic on the global economy. According to the forecast released by the International Data Corporation (IDC), the drop in the global economy forces many organizations around the world to respond with contingency planning and spending cuts in the short term.
Global spending on IT to drop more than Overall real GDP
IDC estimates that global spending on hardware, software, and IT services will decline more than overall real GDP. IT spending is forecasted to fall from a growth of 5.1% in January to a decline of about 2.7% at the end of March.
Global spending on Information Technology (IT) increased by almost 5% in 2019
Similar to the previous economic recessions, spending on IT is likely to decline as commercial IT buyers and consumers implement rapid cuts in capital spending in line with declining revenues, profits, market valuations, and employee headcounts.
Global spending on PCs, tablets and mobile phones to decline
The global spending on Personal Computers (PCs), tablets, mobile phones, and peripherals are expected to decline as the overall device spacing forecast shows an 8.8% decline.
According to IDC, The current COVID-19 crisis will significantly disrupt the high returns expected in the smartphone sector in 2020 due to the progress made in 5G technology.
Server and Network hardware to decline despite demand for cloud services
Overall server/storage hardware spending is expected to drop by 3.3% despite strong demand for cloud services. This is because enterprise customers delay purchases during the initial rapid response phase of the pandemic.
However, the total infrastructure spending (including cloud) will increase by 5.3%, due to enterprise spending on infrastructure as a service (IaaS) and cloud provider spending on servers.
Software spending to increase while IT services spending decreases
The shift to remote work for many companies has halted the progress of many projects and affecting IT services spending in the process. The spending on IT service is expected to decline by 2% as many organisations are waiting for the end of the crisis to see business visibility.
However, software will post positive growth of about 2% due to cloud investments and an increase in demand for components that are integral to ongoing business operations.
“There will be pockets of opportunity for software and related services during the next six months, as organizations create response measures focused around increased remote work and collaboration,”Stephen Minton, program vice president in IDC’s Customer Insights & Analysis group
Overall ICT spending to decline but telecoms spending rises
The total spending on Information and Communication Technology (ICT) is expected to drop 1.6% to just under $4.1 trillion. A significant decline from 3.5% growth recorded in the sector last year.
However, Telecoms was less impacted by the crisis as the forecast shows a 0.5% growth in spending. This is because the demand for broadband remains extremely strong especially due to the increased use of remote work and isolation measures being enforced to curb the spread of the pandemic.
In summary, most sectors of the global IT space are expected to decline due to the current world crisis. The figures reported in the IDC Worldwide Black Book Live Edition which shows the latest IT spending forecasts for annual growth across 100 countries show a rocky year ahead for stakeholders in the sector.
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