Gartner expects IT spending to recover quickly

Gartner market researchers expect global IT spending to decrease 7.3 percent in 2020. However, they hope for a quick recovery as cash flow improves over the course of the year.

The market research institute Gartner, in its new forecast for IT expenditure, assumes that the IT market will reach a value of $ 3.5 trillion by the end of 2020, which is about $ 300 billion less than in 2019. For Gartner then expects growth of 4.3 percent in 2021.

The new numbers are a revision of the May 2020 forecast, in which the market research agency estimated that the global IT market would be worth $ 3.4 trillion in 2020.

The coronavirus pandemic is far from over. Travel and event restrictions, business interruptions, the shift to remote work models, and uncertainty have all contributed to companies tightening their belts or collapsing entirely. However, to adapt to work from home, virtual conferencing, and remote operations, some companies also had to invest in new equipment and services.

Gartner expects every major segment of the IT market – including data centers, business software, devices, and both IT and communications services – to experience a decrease in spending. However, some areas will survive the pandemic somewhat better than others, with general IT and communications services the least affected alongside business software.

The device market is expected to be the hardest hit with a 16.1 percent drop in spending, followed by a 10.3 percent drop in data center investment. There was also a decline in IT services with a minus 6.8 percent and enterprise software with a minus 5.7 percent. Communications holds up best at minus 3.3 percent.

Gartner forecast 2020 and 2021 (Image: Gartner)Gartner forecast 2020 and 2021 (Image: Gartner)

“Working from home caused a temporary spike in equipment purchases as companies introduced business continuity plans to respond to COVID-19. However, it is not expected that device spending will soon return to 2019 levels, ”said Gartner.

Market researchers predict that a backlog of upcoming IT projects that have been interrupted or delayed due to the pandemic will affect operating cash flow as companies try to get back on their feet. As a result, CIOs may switch to subscription-based services and cloud technologies instead of opting for internal technologies that require high upfront costs.

The infrastructure-as-a-service (IaaS) market is expected to grow 13.4 percent to $ 50.4 billion in 2020, and cloud-based video conferencing tools will also see a 46 7 percent calculated over the course of the year.

In the meantime, IT spending is expected to recover quickly, triggered by a slow return to normality and a gradual increase in cash flow, rather than a sudden rise in spending expected by the economy as a whole will when the lockdown measures wane.

“Organizations cannot revert to past processes that are now out of date due to the disruption of their primary sources of income during the pandemic,” commented John-David Lovelock, VP of Gartner. “From cinemas to banks, COVID-19 forces all organizations to get creative and stay afloat without offering only physical experiences. In particular, CIOs with less liquid funds should become more digital in 2020 ”.

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