The COVID-19 pandemic will result in a 2.7% decline in worldwide IT spending, according to an International Data Corporation (IDC) forecast.
IDC had earlier predicted a decline based on first-quarter indicators, as Telecompetitor reported.
Unsurprisingly, the hardest impact will be felt in hospitality and tourism-heavy industries like transportation and personal and consumer service, with IT spending expected to fall at least 5%.
Additionally, discrete and process manufacturing faces significant risks due to the virus with spending expected to fall by more than 3% in 2020.
Meanwhile, IDC said that it expects more “recession resistant” industries like the government to fare a bit better with federal and state/local spending both forecast to increase slightly in 2020. IT spending in the healthcare and telecommunications segments are also forecast to grow slightly because they need to meet new demands presented by the pandemic. The professional services category is expected to see the strongest growth in IT spending this year with an expected year-over-year increase of 1.7%.
COVID-19 IT Spending Forecast
“While industries that offer digitally-enabled or critical services offer some bright spots, those industries that rely on physical products, an in-person presence, or [that] provide luxury services are struggling,” said Jessica Goepfert, IDC program vice president, customer insights and analysis, in a prepared statement about the COVID-19 IT spending forecast. “Once the near-term reprioritization is underway, the next step is to understand the path to recovery. For instance, industries that have suffered major shutdowns and layoffs will be slower to invest in technology than those that have been able to maintain somewhat normal operations. In order to mitigate risk and exposure to the economic downturn, technology suppliers must reprioritize and refocus their efforts toward the more resilient segments.”
Small offices (less than 10 employees) and small businesses (10-99 employees) will see the biggest percentage reduction in IT spending this year at 4.9% and 2.7% respectively, according to IDC. However, large businesses (500-999 employees) and very large businesses (more than 1,000 employees) are forecast to see IT spending fall by more than 1% this year representing a drop of $17 billion.