The entire world has taken a knock thanks to the coronavirus. And the IT industry is no exception. According to research from Buyshares.co.uk, global spending on enterprise software for 2020 will reach $426 billion, which indicates the first drop in IT spend in a decade. A tough pill to swallow considering the fact that spending reached an all-time high of $458 billion in 2019.
The research attributes the projected decline in spending to COVID-19.
“Inevitably a major economic recession, in Q2 especially, will translate into some big short-term reductions in IT spend by those companies and industries that are directly impacted,” explains Stephen Minton, programme VP for IDC’s Customer Insights and 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,” Minton continues.
For example, overall spending on hardware is set to decline dramatically this year. The global decline in economic activity has affected upgrade cycles for items like smartphones, which were expected to receive a boost with the proliferation of 5G. Infrastructure spending, on the other hand, is still expected to boast moderate growth because businesses continue to fund existing cloud deployments. Many are also looking for ways to accelerate cloud projects in an effort to control costs and limit capital spending on network/infrastructure upgrades.
According to John-David Lovelock, distinguished research VP at Gartner, CIOs are focused on cost optimisation, which means that they are focused on minimising investments and are prioritising operations that keep the business running.
“Where there is growth, most of it is in the cloud,” notes Minton. Which makes sense given the fact that remote working remains the status quo across the globe.
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