Worldwide IT spending is now expected to decline 5.1% in constant currency terms this year to $2.25 trillion, as the economic impact of the COVD-19 pandemic continues to drive down some categories of tech spending and short-term business investments.

A new update to the IDC Worldwide Black Book Live Edition shows ICT spending, which includes telecom and business services, will decline by 3.4% this year to just over $4 trillion with telecom spending down 0.8%.

However, IT infrastructure spending is still projected to grow overall by almost 4% to $237 billion with resilient spending by service providers in addition to ongoing enterprise demand for cloud services offsetting declines in business capital spending.

IDC: Drop in IT spending in nearly every industry in 2020 due to COVID-19

IDC: 5% growth in worldwide IT spending in 2020

“Inevitably a major economic recession, in Q2 especially, will translate into some big short-term reductions in IT spending by those companies and industries that are directly impacted,” said Stephen Minton, program vice president in IDC’s Customer Insights & Analysis group.

Infrastructure spending

Overall spending on devices including PCs and phones will be down significantly this year and is the main drag on total IT spending with the economic fallout likely to disrupt upgrade cycles for smartphones, which were expected to be boosted by the launch of premium 5G devices. The PC market was already expected to decline this year after a commercial refresh cycle in 2019, leaving discretionary upgrades to new notebooks and tablets extremely vulnerable to any period of economic decline.

Infrastructure spending, on the other hand, is still expected to post moderate growth overall as businesses continue to fund existing cloud deployments while some may even look to accelerate their cloud projects during the remainder of the year as a means to control costs and defer capital spending on upgrades to on-premise datacenters and applications.

IT services

IT services spending will decline, mostly due to delays in big new projects, but a large portion of services revenue will be relatively protected from spending cuts where it relates to the management, support, and operations of technology, which is now fundamental to business performance and viability. At the same time, many companies are also reluctant to reverse course on digital transformation, which is central to business strategy.

Telecom spending will decline by almost 1%, which is relatively stable compared to other types of technology investments. Carriers will continue to invest in 5G network deployments in many countries, while the lockdown has increased demand for fixed broadband services in the short term. The economic fallout will put some macro pressure on consumer spending, including upgrades to 5G mobile contracts, in the second half of 2020, but the overall impact on telecom spending will be moderate compared to other ICT markets.