Market research firm IDC has cut its IT spending forecast for 2020, expecting to see a “significant slowdown” in hardware along with software and services spending as the coronavirus pandemic continues to spread across the globe.
IDC now forecasts only 1% growth in IT spending in 2020, compared to its original expectation in January of 5% growth year over year, adding that its spending forecast is likely to lower further over the next few weeks due to the increasingly impact of the coronavirus.
“Our monthly data and surveys are clearly pointing in one direction, but it’s still early to understand the full impact of the coronavirus crisis across all sectors of the economy,” said Stephen Minton, vice president of IDC’s Customer Insights & Analysis group in a statement. “We are using scenario models to illustrate that forecasts have a wider range than usual, and the downside risks in those models seem to be increasing every day. But the duration of the crisis remains a big unknown and will go a long way in determining overall market growth for the year as a whole. … Things could get worse, but hopefully not.”
Worldwide IT spending was originally forecast to grow by just over 5% this year, according to IDC, as strong PC sales in the fourth quarter gave way to smartphone upgrade cycle driven by 5G and an uptick in service provider infrastructure spending. Additionally, IDC saw momentum in digital transformation projects that ensured strong demand for software and IT services.
IDC said lowering its IT spending forecast from 5% to 1% is a “pessimistic scenario” not a “worst-case scenario.”
“Things are moving so quickly that we need to constantly recalibrate our assumptions and expectations, but the pessimistic scenario reflects an IT market in which weaker economic growth translates into weaker business and consumer spending across all technologies over the next few quarters,” said IDC’s Minton.
The coronavirus has dramatically affected the IT world – from component shortages, stock market plummets and vendor sales drops to the cancelling of major conferences across the globe.
Many IT vendors, partners and customers have restricted travel, switching from in-person meetings and briefings to virtual videoconference meetings.