Global IT spending projections have slid from positive to negative territory in a matter of weeks. The market, which includes hardware, software, and IT services, is now expected to decline at a greater rate than gross domestic product overall, according to a new report from IDC. 

The firm is now forecasting a 2.7% decrease in worldwide IT spending this year. It was projecting growth of 4.3% just one month prior, marking a dramatic 7% decline in the last month. IDC forecasted growth of 5.1% at the end of January.

The abrupt reversal underlines the extent to which the coronavirus pandemic is leaving analysts, and the global economy at large, flat footed as it permeates every facet of society, bringing much of the world to a standstill. Nearly 10 million people filed for unemployment benefits in the United States during the last two weeks of March and stay-at-home orders are now in place across much of the country.

“Overall IT spending will decline in 2020, despite increased demand and usage for some technologies and services by individual companies and consumers,” said Stephen Minton, a VP at IDC, in a prepared statement. He also noted that ongoing uncertainty related to the length of the pandemic’s impact, including the human and economic toll, could cause extended spending contractions. 

“Businesses in sectors of the economy that are hardest hit during the first half of the year will react by delaying some purchases and projects, and the lack of visibility related to medical factors will ensure that many organizations take an extremely cautious approach when it comes to budget contingency planning in the near term,” he explained. 

Demand for cloud services remains high, but enterprises are delaying purchases due to the crisis, according to IDC. Total spending on infrastructure will grow 5.3% this year, but all of that growth will be attributed to infrastructure-as-a-service (IaaS) and cloud provider spending on servers, the firm said.

Software is another relatively bright spot with global spending forecast to jump 1.7% this year, but that’s a far cry from the 10% gains it reported last year. Infrastructure spending increased 8.8% last year, according to IDC.

'Very Bad Year for IT Services'

The biggest declines will occur in devices and IT services, which are now projected to slide 8.8% and 2%, respectively, this year. The firm expects the worst declines to hit project-oriented services, managed services, and support.

IDC isn’t the only firm revising its projections. While IT infrastructure vendors may bounce back after suffering supply chain issues, other sectors will encounter challenges, according to GlobalData. “2020 will be a very bad year for IT services and consumer electronics,” the firm wrote in a recent report.

Total spending on information and communications technology (ICT) is now expected to decline 1.6% this year to almost $4.1 trillion, according to IDC. Telecommunications spending will increase 0.5% this year and return to a 1% growth rate, mirroring 2019’s performance, in 2021, the firm added. ICT spending is also expected to return to growth at a rate of 3.4% while IT spending grows 4.9% next year. 

“There will be pockets of opportunity for software and related services during the next six months, as organizations create response measures focused around increased remote work and collaboration,” Minton said. “Organizations that are further along the digital transformation and cloud migration scales are likely to be best positioned in terms of integrating these technologies into effective and agile response plans.”