IT buyer confidence plunges in the US, but APAC is more hopeful

IT buyer confidence in the US has plunged during COVID-19 and may not pick up until pandemic control measures ease — according to the International Data Centre’s (IDC) COVID-19 Tech Index.

The decline has come in the last two weeks, as businesses adjust to bearish GDP forecasts for Q2, and confidence remains weak in Europe.

IDC Vice President Stephen Minton said although some firms have indicated increased spend on certain technologies, this will unlikely prevent an economic contraction over the next few months.

“A month ago, overall spending projections by IT buyers were still positive in a few areas like artificial intelligence (AI) and other digital transformation projects,” he said.

“US companies were especially reluctant to impose delays on strategic IT projects and deployments. But the reality of a major economic contraction in Q2 appears to have caught up with CIOs and IT departments in the last few weeks.

“Where demand is still increasing, it is increasingly focused on a narrow range of technologies that are critical to support remote workers, such as videoconferencing and remote access solutions.”

Recovery of buyer confidence will depend on the pace and likelihood of the economy reopening in Q3, the report shows.

In contrast, buyer intent was more encouraging in the Asia Pacific (APAC) region, with positive trends emerging in China and other countries.

“Businesses in APAC showed some signs of improving confidence, which reflects a general sense of optimism that the worst may be over in a few countries, including China,” Minton said.

“The crisis began in China and it makes sense that it may end there soonest, although it’s too soon to be sure this isn’t a false dawn given that measures to open the economy will be carefully managed for any signs of a second wave of infections.

“The impact on IT spending will be continued uncertainty for some period with many firms lacking the visibility to make major strategic decisions or commit to short-term spending increases.”

In this uncertain environment, Minton said businesses will continue funding mission-critical IT deployments including cloud services and will seek to support remote workers. However, some new projects will inevitably be deferred.

“The cloud isn’t going anywhere, all of the data stored in the cloud isn’t going anywhere, and the need for companies to analyse and extract value from all of that information isn’t any less today than it was three months ago,” Minton said.

“But decisions to fund new deployments will be hard to make for firms experiencing major declines in revenue, and spending cycles will be longer while decision-makers are spread around the world in remote locations.

“New tech products will come to market more slowly and upgrades to office networks or equipment are a low priority while offices remain closed. These headwinds will pass, but there are still milestones to clear before IT spending begins to grow again.”

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