Global IT spendings to shrink 8% in 2020, says Gartner

• Spending on devices and data centre systems will see a significant drop of up to 15.5% and 9.7% respectively in 2020
• Public cloud services will see a 19% increase in spending due to growing remote working requirements.

A boom in demand for specific digital services during the pandemic-induced lockdown notwithstanding, global IT spending is likely to shrink 8% in 2020 at an estimated $3.4 trillion, Gartner Inc has forecast.

The economic downturn brought on by the virus outbreak and the lockdown of factories and cities to contain it has made CIOs across the world defer spending on digital transformation initiatives while prioritising spending on critical technologies.

“CIOs have moved into emergency cost optimisation which means that investments will be minimised and prioritised on operations that keep the business running, which will be the top priority for most organisations through 2020,” John-David Lovelock, distinguished research vice president at Gartner, said in a press statement.

Spending on devices and data centre systems will see a significant drop of up to 15.5% and 9.7%, respectively, in 2020. Spending on IT services will fall 7.7% and on that on enterprise software 6.9%.

The only silver lining this year will be sub-segments such as public cloud services, which as per the report will see a 19% increase in spending due to growing remote working requirements. Cloud-based telephony and cloud-based conferencing services will see an increase in spending of 8.9% and 24.3% respectively.

Lovelock pointed out that overall cloud spending levels Gartner had projected for 2023 and 2024 will now be realised by 2022.

The report added that spend on IT will take years to get back to the 2019 levels. The hardest hit sectors including entertainment, air transport and heavy industry will take more than three years to return to what they were spending last year on IT.

International Data Corporation (IDC), in a May report, forecast a 3-4% drop in global IT spending. In India, the actual impact is expected to manifest by the middle of 2020. Discretionary IT spending will be hit as enterprises will be restructuring their cost structure in coming months.