ICT spending expected to plummet this year, says GlobalData

ICT spending in Australia will take a significant hit in the COVID-19 recovery phase, with GlobalData forecasting a 5.9% decline by the end of 2020.

The drop will be seen at varying levels of severity across each market segment, with hardware weathering the greatest fall at 6.8%. This is a sharp contrast from the 11.5% growth observed in 2019 and the previous — pre-COVID — estimate of 8.6% growth for 2020.

Kaipa Sai Shashank, Senior Technology Analyst at GlobalData, expects the downturn to persist for the foreseeable future.

“Enterprises are refraining from non-critical hardware purchases, and these longer device refresh cycles will strongly impact spending on hardware in the near future,” Shashank said.

“Also, the current trend of remote working is shifting organisations’ internal ICT infrastructure towards cloud-based applications and storage options that offer strong business continuity from an operational perspective.”

The software segment will also be affected, owing mainly to the impact of COVID-19 across the travel, leisure, transportation and logistics sectors. Within these industries ICT spending will plummet to a 19.4% year-on-year decrease.

“The uncertain economic environment has adversely affected the enterprise software spending on licences and the rollout of new applications in 2020 across all verticals,” Shashank argued.

Growth will, however, be seen in public cloud markets — including SaaS and PaaS — which are forecast to reach an overall 3.1% year-on-year increase in spending.

Additionally, enterprise social networking and collaboration platforms are set to surge by 29.4% for 2020 — owing to a widespread shift towards long-term remote work.

“There are a few positive trends around the penetration of mobility and cloud technologies for small and medium enterprises in particular,” Shashank said.

“Overall, the market remains quite uncertain, and the recovery path of the market will hinge on the increased spending on digital transformation technologies from the Australian enterprises.”

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