IT spending forecasts looking grim amid coronavirus scare

Coronavirus projected to cut IT spending by $200 billion in 2020, but mass migration to the cloud could save it

The coronavirus outbreak, which the World Health Organization recently classified as a pandemic, has created havoc for businesses worldwide. Whether it’s airlines seeing massive drops in reservations, movie theaters seeing fewer moviegoers or Uber drivers seeing fewer fares, virtually every business has seen some type of impact. Even IT is bracing for an impact, according to technology research firm International Data Corp.

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IDC initially expected to see relatively strong growth of 4% in IT spending in 2020, but amid the coronavirus scare, IDC expects this to fall. The precise landing point remains uncertain, but IDC expects a 3-percentage-point drop to just 1% growth.

In the worst of situations, IDC expects IT spending estimates to fall from $2.5 trillion to $2.3 trillion.

One variable that could help maintain the projected growth is the sudden uptick in spending on tools necessary for remote work. This uptick is mostly due to companies preparing to go almost 100% remote to prevent the spread of the virus.

Stephen Minton, vice president of customer insights at IDC, is not so sure this uptick will help. He told The Wall Street Journal that “any upticks will be offset by the negative impact overall when this shakes out.”

So what’s causing this drop? A lot of it is due to contingency plans enacted by companies having supply and service issues related to the coronavirus. When they enact these plans, they generally hit IT’s pocketbook the hardest, as companies cut spending on tech projects and computing hardware and funnel the money toward keeping the business flowing.

The real question at hand is whether spending will return to normal, spike or continue to fall once the coronavirus scare has passed. John-David Lovelock, the chief forecaster for technology and service providers at Gartner Inc., expects post-coronavirus growth in communications and collaboration technology. He pointed toward the increase in communications software spending after the SARS outbreak in 2002 as a potential barometer.

There are a few key differences between technology today and in the days of SARS, particularly the proliferation of corporate cellphones in today’s world. But, just as those were a relative novelty in 2002, cloud computing is a similar novelty today.

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And with some companies dealing with the pains of not being prepared for remote working ahead of this scare, many may choose to jump feet first into the cloud post-corona. Hopefully, this will give IT spending the quick boost it needs to get back on track.

Only time will tell.

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