Australian tech spending to decline in 2020: Gartner

Australian IT spending is forecast to decline in 2020 due to the restrictions around COVID-19, with devices and data centres the most affected.

Research firm Gartner expects overall IT spending will decline 6 percent to $88.8 billion, down from $94.4 million in 2019 as companies start tightening their purses amid an upcoming recession.

Data centre technologies and devices - which include PCs, tablets, smartphones - will be hit the hardest with 12.8 percent and 14.8 percent declines, respectively.

The remaining segments - enterprise software, IT services and communication services - are also expected to decline by 3.6 percent, 4.8 percent and 3.8 percent respectively.

Globally, IT spending is predicted to decline 8 percent to US3.4 trillion, compared to $3.7 trillion in 2019. Like in Australia, data centre tech and devices will be hit the hardest, with 9.7 and 15.5 percent declines, respectively. All other segments will also see declines.

Gartner analyst John-David Lovelock said CIOs have tightened their spending as their employers have moved into emergency cost optimisation mode, minimising investments and focusing on keeping the business running for the rest of 2020.

“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,” Lovelock said.

Lovelock adds that the one bright spot in the global forecast is public cloud services including telephony, messaging and conferencing.

“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,” Lovelock added.

“IT spending recovery will be slow through 2020, with the hardest hit industries, such as entertainment, air transport and heavy industry, taking over three years to come back to 2019 IT spending levels,” Lovelock said.

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