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The IDC predicts that overall spending on technology will drop by 5.1 percent this year. The ongoing corona crisis is forcing companies to cut IT spending.

The IDC originally predicted that IT spending would grow by 5 percent this year. The company revised the prediction in March after the coronavirus outbreak began spreading from China to other parts of the world. In the end, the IDC only predicted a growth of 1 percent.

Two months have passed since the initial revision, and the IDC has changed their prediction for 2020 yet again. The analyst firm suspects that IT spending will decrease by 5.1 percent. There’s more than just negative news going on in the IT market. The IDC expects the infrastructure market to grow by 3.8 percent to an overall value of 237 billion dollars.

The expectation is that companies will continue to spend money on cloud implementations. These investments may even be accelerated to manage costs. According to IDC, enterprises plan to postpone capital expenditure on upgrades to existing on-premises data centers and applications. This means enterprises will have less money available for new devices and hardware.

Uncertain future

IDC predicts a 12.4 percent drop in hardware investment. The economic impact of the coronavirus will likely harm certain aspects of the market, for example, the new updates to 5G smartphones. The computer market will also slump even further, a trend that has been ongoing for some time since most users switched to Windows 10.

Due to the ongoing measures to contain the coronavirus outbreak, enterprises postpone large projects. As a result, the IDC expects software and service expenses to decrease by 1.9 percent and 2.6 percent, respectively.

“IT spending is very uneven right now with businesses dealing with the type of crisis that was not envisaged in many contingency plans,” said Stephen Minton, IDC’s program vice president, Customer Insights & Analysis group. “When all is said and done, we expect to find that early adopters of cloud and other digital technologies were best positioned to ride out this kind of storm with the least amount of disruption from an operational perspective, even if the direct impact on revenue is still more affected by external factors that no CEO or CIO saw coming.”