IDC is predicting that worldwide IT spending to decline 2.7% this year due to the economic impact of the COVID-19 pandemic, with certain industry segments such as hospitality and tourism-heavy industries, like transportation and personal and consumer services, expected to be the most negatively impacted markets. IT spending in such segments are expected to decline by 5% or more.
However, IDC is forecasting that more "recession resistant" segments, like government, will fare a bit better. IT spending in the healthcare and telecommunications segments are also forecast to grow slightly as they respond to new demands presented by the pandemic. Professional services will see the strongest growth in IT spending this year with an expected year-over-year increase of 1.7%.
"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 provide luxury services are struggling," said Jessica Goepfert, program vice president, Customer Insights & Analysis. "Once the near-term reprioritization is underway, the next step is to understand the path to recovery. For instance, industries which 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."
Some additional predictions:
- 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.
- Large businesses (500-999 employees) and very large businesses (more than 1,000 employees) represent a much larger market opportunity.
- Both segments are forecast to see IT spending fall by more than 1% this year representing a drop of $17 billion.
- Hardware will see the largest decline with spending expected to decline more than 5% this year as companies pull back on most near-term infrastructure investments.
- IT services and business services will see a more moderate reduction in spending as companies focus on keeping their existing operations and mission-critical projects going.
- Software will be the bright spot in technology spending, with growth of nearly 2% led by purchases of collaborative applications and content workflow and management applications.
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