The adverse effect of the on-going Coronavirus outbreak has resulted in a far-reaching decline in IT spending
Gartner has cut down the global IT spending forecast to $3.4 trillion due to the increasing market uncertainties amid the COVID-19 pandemic. Earlier this year, the company predicted that global spending on IT, along with devices, cloud solutions, data center equipment, and enterprise software, would touch roughly to $3.9 trillion in 2020 – from $3.8 trillion in 2019. That estimation did not anticipate the enormous disruption brought about by the pandemic.
With widespread lockdowns, the virus outbreak is spreading shockwaves through the global economy with job losses, travel bans, and business closures. And unfortunately, the IT industry is one of those sectors that have experienced massive losses. As a result, the focus on growth is less, and businesses are more into recovery. It will take over three years for the current IT spending to meet the 2019 level spending. As per Gartner, the previous growth indicators, including cloud technology and device sales, will not stop – but will see an 8% decline in the spending from 2019.
Most CIOs have now shifted their focus on resources at a different enterprise landscape like never before. It has been quickly moved to remote working, many employees are on furlough or job cut, and empty offices are seen all around. Hence, spending is now on high priority with the “mission-critical” technology and services to keep businesses as functional as possible. This is any day a smarter plan instead of being transformative or promote corporate growth in this time of crisis.
As cited by John-David Lovelock, VP at Gartner Research, “CIOs have moved into emergency cost optimization, which means that investments will be minimized and prioritized on operations that keep the business running, which will be the top priority for most organizations through 2020.” According to Gartner, it is expected that every IT segment would experience a decline over time in 2020. And device purchases and data center systems are most likely to suffer the most substantial blow.
This crisis has created a high demand for many other technologies, including video conferencing tools, remote working tools, and public cloud offerings. Thus, public cloud services are expected to rise by 19% in 2020, while other messaging and cloud-based telephone spending will surge by 8.9%. Also, the conference tools are expected to experience an increase of 24.3%.
Clearly, with the looming economic slowdown, it is crucial for technology enterprises to reevaluate their efforts. This will provide businesses with more resilient segments to mitigate risk and lower the economic impact of the exposure.