Anyone working in IT knows these are confusing and anxious times. You’ve probably seen some long-term IT projects delayed or scuttled. But you may also be seeing new IT spending to meet the pressing needs of the exploding new remote workforce. Some IT firms are furloughing or firing employees while others are hiring.
But how will this all shake out by the end of the year?
When 2020 ends, worldwide spending on IT is expected to decline 8 percent, according to a new analysis and forecast from Gartner. Spending will total $3.4 trillion, down from $3.7 trillion in 2019. Gartner attributes the decline to the COVID-19 pandemic and the effects of the global economic recession as chief information officers “prioritize spending on technology and services that are deemed ‘mission-critical’ over initiatives aimed at growth or transformation.”
As you can see in the chart below, Gartner is forecasting that all IT segments will see a decline in spending this year, led by reduced spending on devices and datacenter systems. Gartner does say that spending on cloud services, which falls into multiple categories, will be a “bright spot” because of the shift to remote work. Specifically, Gartner forecasts that IT spending on public cloud services will grow 19 percent and investments in cloud-based conferencing will shoot up 24 percent.
| 2019 spending | 2019 growth | 2020 spending | 2020 growth | |
| Datacenter systems | $211 billion | 0.7% | $191 billion | -9.7% |
| Enterprise software | $458 billion | 8.8% | $426 billion | -6.9% |
| Devices | $698 billion | -2.2% | $589 billion | -15.5% |
| IT services | $1.0 trillion | 3.8% | $952 billion | -7.7% |
| Communications services | $1.3 trillion | -1.6% | $1.2 trillion | -4.5% |
| Overall IT spending Source: Gartner |
$3.7 trillion | 1.0% | $3.4 trillion | -8.0% |
John-David Lovelock, a research vice president at Gartner, says CIOs are focused now on short-term goals that keep the business up and running. “CIOs have moved into emergency cost optimization,” Lovelock says. “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.” Hardest-hit industries, such as entertainment, air transport, and heavy industry, will take more than three years to come back to 2019 IT spending levels, Lovelock says.
If your company is a Gartner client, you can download the full “Gartner Market Databook, April 2020 Update” here.
Featured image: Shutterstock
