Global IT Spending Set for Sharp Decline as Pandemic Forces Businesses to Cut Costs

Global spending on information technology is expected to fall by 2.7% in 2020 as businesses scale back investments in response to the economic disruption caused by the COVID-19 pandemic, according to new forecasts from International Data Corporation (IDC). The revised outlook marks a dramatic shift from the firm's earlier projection of 5.1% growth issued at the start of the year.

The forecast highlights how the global health crisis has triggered widespread cost-cutting measures, forcing organizations to delay technology projects and reduce spending amid growing economic uncertainty. IDC estimates that spending on hardware, software and IT services will contract more sharply than overall global economic output.

Consumer technology is expected to be among the hardest-hit segments. Spending on PCs, tablets, smartphones and related peripherals is projected to decline by 8.8%, with the smartphone market facing significant setbacks despite industry expectations that the rollout of 5G technology would drive growth throughout the year.

Enterprise hardware spending is also forecast to weaken. IDC expects spending on servers and storage systems to fall by 3.3% as businesses postpone infrastructure upgrades while focusing on immediate operational needs. However, cloud infrastructure investment remains a bright spot, with overall infrastructure spending projected to grow by 5.3% due to increased demand for Infrastructure-as-a-Service (IaaS) platforms and expansion by major cloud providers.

The rapid shift to remote work has created a mixed outlook for software and IT services. Spending on IT services is expected to decline by 2% as organizations delay new projects and consulting engagements. In contrast, software spending is forecast to rise by roughly 2%, supported by growing demand for collaboration tools, cloud applications and other technologies needed to maintain business continuity.

According to IDC analysts, companies are prioritizing investments that support remote operations and workforce productivity while postponing non-essential projects until economic conditions become clearer. This trend has created new opportunities for cloud-based software providers despite broader weakness across the technology sector.

Overall spending on information and communications technology (ICT) is expected to decline by 1.6% to just under $4.1 trillion, reversing the 3.5% growth recorded in the previous year. The telecommunications sector is expected to remain relatively resilient, posting modest growth as demand for broadband and connectivity services continues to rise during periods of remote work and social restrictions.

The latest projections, published in IDC’s Worldwide Black Book market forecast, underscore the significant challenges facing the technology industry as businesses navigate one of the most disruptive economic periods in recent history.