IDC has revised the worldwide IT services and business services revenue would decline by 2.8% in 2020. The forecast is based on the Economist Intelligence Unit’s May forecast for worldwide GDP in 2020, which will likely contract by around 4.4%. IDC though foresees growth in 2021, optimistic of a market rebound.
“With the almost four months of shutdowns across most developed markets, the economic downturn in the first half of 2020 will be so severe that even a robust recovery in the next six months will not offset it”.
In Asia/Pacific, a few key markets including Australia declined further since March. Australia is forecast to slow down dramatically in lieu of worsening economic conditions.
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Service providers going strong
Even though there’s a decline in the purchasing activity for the IT services, the supply side remains robust. The major delivery centres including India and the Philippines have quickly adapted to working from home at scale.
The report notes most service providers see the COVID crisis tipping organizations and consumers over to the digital world – a net positive in the long run.
Services market growth will outpace GDP growth despite COVID.
“We will continue to see the services market growth outpace GDP growth,” said Xiao-Fei Zhang, program director, Global Services Markets and Trends.
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Growing Investments in Cloud, Security and Blockchain
Incidentally, Gartner forecasts rest of 2020 could see an 8% decline in global IT spending while Australia is set to experience a 6% fall. However, as the COVID-19 pandemic continues to spur remote working, sub-segments such as public cloud services (which falls into multiple categories) will be a bright spot in the forecast, growing 19% in 2020, according to Gartner.
Australia IT Spending Forecast (Millions of Australian Dollars)
| 2019 | Growth | 2020 | Growth | |
| Data Centre | 3,225 | 2.3% | 2,813 | -12.8% |
| Enterprise Software | 16,914 | 11.9% | 16,307 | -3.6% |
| Devices | 13,026 | -1.6% | 11,094 | -14.8% |
| IT Services | 34,393 | 5.1% | 32,732 | -4.8% |
| Communications Services | 26,861 | 0.6% | 25,852 | -3.8% |
| Overall IT | 94,418 | 3.8% | 88,799 | -6.0% |
Despite a slowdown in IT Security spending, cloud security gets a massive boost. Gartner reported COVID is driving “short-term demand in areas such as cloud adoption, remote worker technologies and cost-saving measures“.
Although overall spending numbers show a decline, the trend is clearly favouring projects delivering on business transformation initiatives amid the pandemic. The increase in cloud, security and blockchain spending confirms the trend.
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