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Global IT spending plunges, but will have faster recovery - Gartner

Global IT spending is expected to decline by 7.3% in 2020, according to new figures from Gartner.

Spending in the segment is still projected to reach $3.5 trillion for the year, despite current cash flow restrictions, the analyst firm says. 

While the global economy is expected to witness a ‘swoosh’ recovery, IT spending will experience more of a ‘swoop’ recovery, it says.

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

“Still, enterprises cannot return to previous processes that are now rendered outdated due to the disruption of their primary revenue stream during the pandemic," he says.

“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.”

Total IT spending will reach $3.5 trillion in 2020, with all segments experiencing a decline in 2020. The hardest hit segment will be devices as cost containment will continue to reduce spending significantly through 2020. 

Spending on devices is forecast to decline 16.1% in 2020. Working from home caused a temporary spike in device buying as businesses implemented business continuity plans for COVID-19 response, however, spending on devices is not expected to return to 2019 levels soon.

Gartner says it sees the pandemic response in three phases and as enterprises enter the second phase – Recover – they will have a backlog of IT projects and less cash to use for them. 

As a result, CIOs will gravitate toward spending on subscription products and cloud services to lower upfront costs. Infrastructure-as-a-service (IaaS) is expected to grow 13.4% to $50.4 billion in 2020 and 27.6% to $64.3 billion in 2021. Ongoing workplace collaboration requirements will fuel sustained end user spending in cloud-based conferencing, which is projected to increase 46.7% in 2020 according to the latest forecast.

“With the easing of lockdown restrictions, many enterprises 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,” says 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.”