IDC’s Nigel Wallis didn’t mince words during an online briefing this week while walking participants through the research company’s latest projections for Canadian IT spending.
“The impact of the coronavirus crisis represents the most significant deceleration in IT spending Canada has experienced in modern times,” Wallis, the research vice-president of IoT and industries said, citing the 2008-09 financial crisis.
Wallis said probably projections for ICT spending for the rest of 2020 are around -5 per cent. However, the Canadian market could expect Canada’s annual IT spending growth rate to drop to -8 per cent under the more pessimistic scenario. This is based on projects from March 24, Wallis warned, so that prediction might change. IDC’s March 31 projections for telecom spending this year amid COVID-19 is an annual growth rate of -2 per cent at worst, well below last fall’s prediction of 3 per cent growth.
IDC also broke down IT spending by category, and the projections suggest client devices, which include smartphones, tablets, laptops and printers, will see an annual growth rate decline of nearly 25 per cent, the sharpest decline out of all categories.
Software sales could experience positive growth this year, bolstered by rising software-as-a-service subscriptions, especially in the collaboration space where videoconferencing and cloud software remain top investments during the pandemic.
The developments around the coronavirus pandemic are changing so quickly that IDC is going to release monthly reports tracking its impact on the IT industry, according to Meng Cong, manager of market insights and analytics. She also explained the challenges of tracking the impacts of the virus.
“The dilemma of forecasting in a crisis is the degree of unknowns,” she said, noting how even since Tuesday, the “facts on the ground have shifted.” The ongoing quarantine efforts across the globe, combined with additional school closures and the shutdown of public gatherings, will likely mean IDC’s pessimistic projections for the remainder of the year are more realistic.
From Channel Daily News:
Channel chiefs weigh in on COVID-19’s impact on partners in new report
Tony Olvet, vice-president of research at IDC, described the situation as a “moving target,” and some of the most important questions remain unanswered.
“How are they going to prioritize certain types of technology spending if they can’t pay their employees or their suppliers of ongoing services,” he said.
During the briefing, Olvet also highlighted some executive comments from the recent survey about IT spending for the remainder of the year. Almost all the comments suggested some readjusting of spending was necessary. There was one comment, however, that surprised even Olvet.
“I don’t think that’s the point of view he or she is going to hold by next week,” he said, citing a quote from an executive that read “COVID-19 has not changed anything in the organization’s business priorities.”
IDC is also making efforts to visualize the impact of the coronavirus on business activities in Canada with a new index tool that’s still in beta mode. With the “high impact” filter turned on, IDC’s index says the virus impacts nearly half of Canadian businesses, Olvet explained during a brief demo. Retail, personal service, and manufacturing make up 80 per cent of the impacted employees. The majority of the affected employees are based in Toronto.
Olvet said it’s crucial businesses check in with business partners and suppliers, as well as customers, during the crisis.
“This is not over, and it’s going to continue for at least a few more months,” he said.
IDC’s COVID-19 research page can be accessed here.