Worldwide IT expenditure to decline 7.3% this year: Gartner

Worldwide IT expenditure to decline 7.3% this year: Gartner
Photo Credit: 123RF.com
14 Jul, 2020

The worldwide expenditure on information technology (IT) services will see a 7.3% year-on-year decline to $3.5 trillion in 2020, according to a study.

The IT devices segment, which is expected to see expenditure fall 16.1% owing to cost containment, will be hit the hardest, followed by data centre systems spends, which is set to decline 10.3%, a report from research firm Gartner showed.

Enterprise software and communications services will be among the least affected segments, predicted to witness a 5.7% and 3.3% reduction in expenditure, respectively, the Stamford, Connecticut-based firm said.

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

Organisations cannot return to previous processes that are now rendered outdated due to the disruption of their primary revenue stream during the Covid-19 pandemic, he said.

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

Read: IT spending in India to decline by 8% in 2020 due to Covid-19: Gartner 

Gartner sees the pandemic response in three phases -- respond, recover and renew. As organisations enter the second phase, they are estimated to have a backlog of IT projects with little cash to infuse in them. CIOs would then spend on subscription-based products and cloud services to lower upfront costs, it said, resulting in a 13.4% growth in infrastructure-as-a-service (IaaS) to $50.4 billion this year and 27.6% to $64.3 billion in 2021.

Read: New tech investments to be delayed by three months: ISG report

Additionally, the ongoing workplace collaboration will result in the end user spending more on cloud-based conferencing solutions, which is expected to grow at 46.7%, the report said.

“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,” Lovelock said.