Australian IT spending to shrink 6% in 2020

Australian IT spending is on track to contract by 6% to just under $8.8 billion in 2020 as businesses rush to cut costs amid the global recession triggered by the COVID-19 pandemic, according to Gartner.

The research firm predicts that the biggest falls in spending will be seen in devices such as PCs, tablets and smartphones — which will decline by 14.8% to $16.3 billion — as well as data centres, where spending is predicted to fall by 12.8% to $3.22 billion.

But all segments of the market are expected to shrink due to the perilous economic climate, Gartner forecasts.

Enterprise software spending is predicted to fall 3.6% to $16.3 billion, IT services spending is set to fall 4.8% to $32.6 billion and communications services spending is expected to fall 3.8% to $25.85 billion.

“CIOs have moved into emergency cost optimisation which means that investments will be minimised and prioritised on operations that keep the business running, which will be the top priority for most organisations through 2020,” Gartner Research Vice President John-David Lovelock said.

“Recovery will not follow previous patterns, as the forces behind this recession will create both supply-side and demand-side shocks as the public health, social and commercial restrictions begin to lessen.”

He said the hardest-hit industries, such as entertainment, air transport and heavy industry, are expected to take over three years to come back to 2019 IT spending levels.

“Recovery requires a change in mindset for most organisations. There is no bouncing back. There needs to be a reset focused on moving forward.”

Globally, IT spending is expected to show a similar pattern of declines. But due to the sudden increase in remote working and education, some segments are likely to benefit from the crisis.

For example, public cloud spending is predicted to grow 19% in 2020, while cloud-based telephony and messaging are forecast to grow 8.9% and 24.3% 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,” Gartner said.

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