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Long road to IT industry recovery

Worldwide IT spending is projected to total $3.4 trillion in 2020, a decline of 8 per cent from 2019, according to the latest forecast from US-based research and advisory firm Gartner.

The coronavirus pandemic and effects of the global economic recession are forcing Chief Information Officers to prioritize spending on technology and services that are deemed “mission-critical”, over initiatives aimed at growth or transformation. 

According to Gartner’s Research Vice President John-David Lovelock, recovery will not follow previous patterns as the forces behind the recession will create shocks to both supply and demand as public health, social and commercial restrictions begin to ease.

“CIOs have moved into emergency cost optimization, which means that investments will be minimized and operations that keep the business running will be the top priority for most organizations through 2020,” he said.

All segments will experience a decline in 2020, with devices and data-center systems experiencing the largest drops in spending.

However, as the COVID-19 pandemic continues to encourage working from home, sub-segments such as public cloud services will be a bright spot, growing by 19 per cent in 2020.

Cloud-based telephone use and messaging will also see high levels of spending, as will cloud-based conferencing, growing by 8.9 and 24.3 per cent, respectively.

“In 2020, some longer-term cloud-based transformational projects may be put on hold, but the overall cloud-spending levels Gartner was projecting for 2023 and 2024 will now be showing up as early as 2022,” Lovelock said.

IT spending recovery will be slow through 2020, with the hardest-hit industries, such as entertainment, air transport and heavy industry, taking more than three years to return to 2019 IT-spending levels.

“Recovery requires a change in mindset for most organizations. There is no bouncing back. There needs to be a reset focused on moving forward,” Lovelock concluded.



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