Global IT spending to decline 7.3% in 2020, says Gartner

All segments of global IT spending are set to decline due to cost containment, according to Gartner, with devices (a 16.1% decrease) being the hardest hit, despite a brief spike due to a rise in remote working amidst the Covid-19 pandemic.

Data centre systems are projected to see a decrease in spending of 10.3%, while IT services, enterprise software, and communications services are set to see declines of 6.8%, 5.7% and 3.3% respectively.

“Overall IT spending is still expected to sharply decline in 2020 but will recover in a faster and smoother manner than the economy,” said John-David Lovelock, distinguished research vice-president at Gartner.

“Still, organisations cannot return to previous processes that are now rendered outdated due to the disruption of their primary revenue stream during the pandemic.

“From movie theatres to banks, COVID-19 is forcing all organisations 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.”

Businesses are about to enter the second of three phases of pandemic response — ‘Recover’ — and will have a backlog of IT projects, along with less money to fund them. As a result, CIOs are set to shift their spending towards subscription products and cloud services in order to cut costs.

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Cloud-based conferencing is projected to grow by 46.7% in 2020, while infrastructure-as-a-service (IaaS) is forecasted to see growth of 13.4%.

“With the easing of lockdown restrictions, many businesses will soon return to a higher level of revenue certainty allowing some cash flow restrictions to ease and CIOs to resume spending on IT again,” said Lovelock. “This pause and restart will push growth out of 2020 and into 2021.

“The smooth ‘swoop’ recovery of top line IT spending masks a very turbulent recovery across some countries, industries and markets.”

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IT Spending