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Gartner: Global IT Spending To Drop 8% To $3.46T In 2020

‘There is no bouncing back,’ says Gartner’s John-David Lovelock, as global IT spending is projected to fall to $3.4 trillion in 2020 due to the coronavirus pandemic.

Global spending on IT across the board – from data center systems and enterprise software to devices and communication services – is expected to fall 8 percent this year to $3.46 trillion due to the coronavirus pandemic.

“CIOs have moved into emergency cost optimization which means that investments will be minimized and prioritized on operations that keep the business running, which will be the top priority for most organizations through 2020,” said John-David Lovelock, distinguished research vice president at Gartner in a statement.

Research firm Gartner is projecting the biggest spending drop of 15.5 percent year over year in IT devices, with total 2020 sales of approximately $590 billion compared to nearly $700 billion in 2019.

The second largest spending decline of nearly 10 percent year over year will be on data center systems, as Gartner projects total revenue of $191 billion this year versus $212 billion in 2019.

[Related: Nutanix’s Dheeraj Pandey: ‘A Furlough Is Reversible, A Layoff Is Not’]

IT services spending is projected to reach $952 billion this year, down 7.7. percent annually, compared to $1.03 trillion in 2019. Gartner is predicting enterprise software sales to drop 7 percent in 2020 to $426 billion compared to $458 billion last year.

The smallest decline of 4.5 percent year over year will come via communications services, where Gartner expects communications services sales of roughly $1.3 trillion, compared to $1.36 trillion in 2019.

“IT spending recovery will be slow through 2020, with the hardest hit industries, such as entertainment, air transport and heavy industry, taking over three years to come back to 2019 IT spending levels,” said Lovelock. “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 said IT economic recovery will not “follow previous patterns” because the COVID-19 crisis will create “both supply side and demand side shocks as the public health, social and commercial restrictions begin to lessen.”

Total global IT spending in 2020 will be approximately $3.46 trillion, down 8 percent year over year compared to $3.76 trillion. Gartner in January had expected worldwide IT spending to reach $3.9 trillion this year, but that was before confirmed coronavirus cases ballooned and government lockdowns wreaked havoc on economies around the world.

However, Gartner is predicting a 19 percent surge in public cloud services revenues in 2020 as the coronavirus pandemic spurs remote working. Cloud-based telephone and messaging and cloud-based conferencing will see high levels of spending growing 9 percent and 24 percent, respectively.

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

Many IT companies have been hit by the economic impact of COVID-19, with some reporting tens-of-millions in lost revenues this year. Other IT companies like VMware and Nutanix are either implementing company-wide salary freezes or temporary furloughs as the uncertainly surrounding the pandemic continues.

This week, Dell Technologies founder and CEO Michael Dell said the new work-from-home workforce will become a “permanent feature” for many companies.

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