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Gartner: Global IT spending to drop by 7.3% in 2020

Analyst firm says the market will see a 'faster and smoother' recovery than the overall economy

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Worldwide IT spending is predicted to total $3.5 trillion in 2020, representing a sharp drop of 7.3% from last year, according to the latest forecast by Gartner

The research firm's report says that, while the global economy is expected to witness a 'swoosh' recovery, IT spending get back on its feet quicker with more of a 'swoop' recovery.

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

"Still, organisations cannot return to previous processes that are now rendered outdated due to the disruption of their primary revenue stream during the pandemic."

Gartner's report, which uses analysis of sales by thousands of vendors across a range of IT products services, revealed that total sales will reach $3.5 trillion this year – but no segment will be able to avoid a decline. 

The hardest-hit area looks set to be devices as businesses look to curb unnecessary spending. The segment looks set to see a 16.1% drop, but is also tipped to return to growth (2.4%) in 2021. That's despite an initial spike in device purchasing earlier this year as businesses implemented COVID-19 response plans, Gartner said.

Behind that, data centre systems is also predicted to fall 10.3% and IT services by 6.8% - but both will also see growth of 6.2% and 5.5% in 2021 respectively, the research firm forecast.

"From movie theatres to banks, COVID-19 is forcing all organisations to get creative and stay afloat without exclusively offering physical experiences," Lovelock continued.

"Specifically, CIOs with less immediate cash on hand should plan on becoming more digital than they had originally anticipated at the start of 2020.”

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As companies enter the recovery stage of their pandemic response, Gartner said they are likely to experience a backlog of IT projects – but less cash to dedicate to them. That means CIOs will shift spending towards subscription products and cloud services to bring down upfront costs.

Infrastructure as a service (IaaS) is predicted to expand by 13.4% to total $50.4 billion this year and 27.6% to $64.3 billion in 2021. Similarly, as businesses continue to communicate remotely, cloud-based conferencing is also projected to increase by 46.7% in 2020.

"With the easing of lockdown restrictions, many businesses will soon return to a higher level of revenue of revenue certainty allowing some cash flow restrictions to ease and CIOs to resume spending on IT again," Lovelock explained. “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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