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How COVID-19 Crisis Has Impacted The IT Spending

How COVID-19 Crisis Has Impacted The IT Spending

How COVID-19 Crisis Has Impacted The IT Spending
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The unprecedented nature of the health crisis has ripple effects on industries — whether it be to travel and tourism, hospitality, healthcare, consumer electronics, banking and finances, or technology industry. This crisis has not only pushed companies to gyrate through a new set of challenges but also forced them to alter their business strategies.

According to experts, one of the biggest impacts has been on the information technology industry, where firms are struggling with their business continuity amid this crisis. Issues such as disruption in the supply chain, remote working of employees, and the unpredictability of the crisis have created a direct impact on IT spending. Not only is it slowing down the tech spending but also the short-term business investments. 

In fact, in a recent report, it has been stated that worldwide IT spending is expected to decline by 5.1% this year to $2.25 trillion, due to this pandemic outbreak. The report further noted that ICT spending, which includes telecom and business services, is also expected to decline by 3.4% in 2020. With the industry going under major disruption with businesses have slowed down their spending on hardware, software and IT services, which in turn can cause a downturn in the economy. Due to the extended lockdown, many employees in big organisations aren’t able to finish their projects, which again can create a massive decline in IT services spending.



According to Stephen Minton, program vice president of IDC’s Customer Insights & Analysis group, “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.” He further stated that this is due to many reasons — “Some firms will cut capital spending and others will either delay new projects or seek to cut costs in other ways.” The report further stated that the overall spending on devices like PCs and phones is also expected to be down drastically this year, which has been the major impact on IT spending this year.

Growing spending in IT infrastructure service 

Although this pandemic is having a negative impact for many, experts believe that the crisis has turned out to be beneficial for cloud service providers, as employees are mandated to work from home, and students are expected to stay home and rely on broadband networks for continuing their studies. These changes have forced companies to advance their investments towards cloud computing in order to aid their employees with the necessary resources to work from home amid lockdown. 

This increasing demand for cloud services among employees has also urged companies to enhance their IT infrastructures and therefore that’s another area businesses are currently investing on. Working on cloud projects can also help businesses in cutting down costs, reducing CapEx and upgrading to advanced technologies. Considering companies are currently working with a huge amount of data, and therefore it has become imperative for them to have a software-as-a-service in order to manage the data, visualise it as well as analyse it. This has benefitted cloud giants like Amazon, Microsoft and Google, as many organisations are moving beyond their traditional data centres to adopt cloud.

Alongside, as remote working becoming critical for organisations, there has been a huge dependency on emerging communication technologies by businesses in order to accelerate their process. Communication and video conferencing tools like Zoom, MS Teams, Skype, WebEx have seen increased demand by becoming the key communication tools between employees and peers amid this lockdown. In fact in another survey done by Analytics India Magazine, it has been revealed that 54.5% of the employees utilised MS Teams to remotely connect and network with other members of their analytics teams and 13.6% of the employees utilised the conferencing tool Zoom.

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Besides, many tech companies are continuously advancing their technologies to provide value to their customers. Many industries such as healthcare as well as banking and finances are in dire need of advanced solutions to enhance their business productivity, and that’s where tech companies have come into the picture.

IBM has recently launched their supercomputer with huge computing power to help analysts better understand the disease and its impacts. On the other hand, SAP has also launched several initiatives to enhance their customers’ supply chain issues. The company has also opened access to various of its solutions to also help with their business continuity.

Wrapping up

Although the pandemic has created a huge disruption in the IT industry, it has also created opportunities for cloud service providers as well as businesses that are working with emerging technologies like AI, analytics, and robotics. Emerging technologies have various benefits in disease detection and prevention, which, in turn, provided IT vendor companies with the opportunity to come up with solutions to help their customers fighting this battle. Besides, a lot of startups that are investing in artificial intelligence as well as other emerging technologies to cut down their business cost and have a smooth operation amid the crisis.

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