Due to the COVID-19 induced global economic recession, worldwide IT spending is projected to total $3.4 trillion in 2020, a decline of 8 percent from 2019, according to a forecast by Gartner on Wednesday.
In October 2019, months before the outbreak of COVID-19, Gartner predicted that global IT spending was expected to rebound in 2020 with forecast growth of 3.7 percent, primarily due to enterprise software spending.
But now the coronavirus pandemic and effects of the global economic recession are causing CIOs to prioritize spending on technology and services that are deemed “mission-critical” over initiatives aimed at growth or transformation, Gartner said in its latest forecast.
“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,” John-David Lovelock, Distinguished Research Vice President at Gartner, said in a statement.
“Recovery will not follow previous patterns as the forces behind this recession will create both supply-side and demand-side shocks as the public health, social and commercial restrictions begin to lessen.”
All segments are expected to experience a decline in 2020, with devices and data center systems experiencing the largest drops in spending.
However, as the COVID-19 pandemic continues to spur remote working, sub-segments such as public Cloud services (which falls into multiple categories) will be a bright spot in the forecast, growing 19 percent in 2020.
Cloud-based telephony and messaging and cloud-based conferencing will also see high levels of spending growing 8.9 percent and 24.3 per cent, respectively, according to the forecast.
“In 2020, some longer-term Cloud-based transformational projects may be put on hiatus, but the overall Cloud spending levels Gartner was projecting for 2023 and 2024 will now be showing up as early as 2022,” said Lovelock.
“IT spending recovery will be slow through 2020, with the hardest-hit industries, such as entertainment, air transport and heavy industry, taking over three years to come back to 2019 IT spending levels,” said Lovelock.