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Gartner says worldwide IT spending to decline in 2020

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Worldwide IT spending will drop 7.3 percent this year, with Covid-19 and the subsequent lockdown leaving its mark on the global economy, according to analyst firm Gartner.

The company's latest report predicts worldwide IT spending will peak at $3.5 trillion this year, with virtually all segments suffering a decline.

The devices segment will be hit the hardest, mostly due to both businesses and consumers cutting costs as the pandemic stretches on. While the switch to working from home caused a temporary spike in device purchases, Gartner does not expect this trend to sustain for much longer.

However, although IT spending fell quickly as a result of the pandemic, the recovery is expected to be even more rapid, especially in the context of the wider economy.

“Overall IT spending is still expected to sharply decline in 2020 but will recover in a faster and smoother manner than the economy,” said John-David Lovelock, Distinguished Research Vice President at Gartner.

“Still, organisations cannot return to previous processes that are now rendered outdated due to the disruption of their primary revenue stream during the pandemic. 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.

As we move into 2021, businesses are expected to enter the recovery phase, with a backlog of IT projects and available cash to spend on them.

Gartner expects subscription products and cloud services to perform well next year, as they offer lower upfront costs.

Infrastructure-as-a-service (IaaS) is expected to grow 27.6 percent, hitting $50.4 billion in 2020 and $64.3 billion in 2021, while Cloud-based conferencing is projected to rise 46.7 percent in 2020.

“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,” said Lovelock.

“This pause and restart will push growth out of 2020 and into 2021. The smooth ‘swoop’ recovery of top line IT spending masks a very turbulent recovery across some countries, industries and markets.”