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Coronavirus

Coronavirus

IDC Lowers Forecast for Worldwide IT Spending to a Decline of 5.1% in 2020, but Cloud Spending Remains Relatively Resilient

Via IDC

May 4, 2020

04 May 2020

IDC Lowers Forecast for Worldwide IT Spending to a Decline of 5.1% in 2020, but Cloud Spending Remains Relatively Resilient

FRAMINGHAM, Mass., May 4, 2020 – Worldwide IT spending is now expected to decline 5.1% in constant currency terms this year to $2.25 trillion, as the economic impact of the COVD-19 pandemic continues to drive down some categories of tech spending and short-term business investments. A new update to the IDCWorldwide Black Book Live Edition shows ICT spending, which includes telecom and business services, will decline by 3.4% this year to just over $4 trillion with telecom spending down 0.8%. However, IT infrastructure spending is still projected to grow overall by almost 4% to $237 billion with resilient spending by service providers in addition to ongoing enterprise demand for cloud services offsetting declines in business capital spending.

"Inevitably a major economic recession, in Q2 especially, will translate into some big short-term reductions in IT spending by those companies and industries that are directly impacted," said Stephen Minton, program vice president in IDC's Customer Insights & Analysis group. "Some firms will cut capital spending and others will either delay new projects or seek to cut costs in other ways. But there are also signs that some parts of the IT market may be more resilient to this economic crash in relative terms than previous recessions with technology now more integral to business operations and continuity than at any time in history."

Note: IT Spending growth at constant currency

Overall spending on devices including PCs and phones will be down significantly this year and is the main drag on total IT spending with the economic fallout likely to disrupt upgrade cycles for smartphones, which were expected to be boosted by the launch of premium 5G devices. The PC market was already expected to decline this year after a commercial refresh cycle in 2019, leaving discretionary upgrades to new notebooks and tablets extremely vulnerable to any period of economic decline.

Infrastructure spending, on the other hand, is still expected to post moderate growth overall as businesses continue to fund existing cloud deployments while some may even look to accelerate their cloud projects during the remainder of the year as a means to control costs and defer capital spending on upgrades to on-premise datacenters and applications.

"Where there is growth, most of it is in the cloud," said Minton. "Overall software spending is now expected to decline as businesses delay new projects and application roll-outs, while there is a fundamental link between employment and spending on things like software licenses and campus networks. On the other hand, the amount of data that companies must store and manage is not going anywhere. Increasingly, even more of that data will be stored, managed, and increasingly also analysed in the cloud."

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