Monday, 16 March 2020 09:01

IDC sees Europe 2020 ICT growth halving due to coronavirus effect

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IDC sees Europe 2020 ICT growth halving due to coronavirus effect Image by Pete Linforth from Pixabay

Analysts from global market intelligence provider IDC see a big showdown in spending on technology in 2020 across European ICT markets, with a halving of their own December 2019 forecast from 2.8% to 1.4% in regional spending growth rates. This comes in the wake of the measures taken across Europe to curb the spread of the coronavirus.

In a statement issued on Friday, Thomas Meyer, general manager and group vice-president of research at IDC Europe, said: "European Technology vendors and buyers are rapidly adapting to the disruption and the extremely fast-moving market conditions.

"In such a fluid scenario, it is still early to fully assess the overall European ICT impact picture. IDC recommends that all technology leaders recalibrate their strategies.

"In use cases such as patient care as well as customer, citizen, student or employee experience and proximity, we expect to see accelerated adoption of digital solutions."

IDC Europe's chief analyst Philip Carter said the company had developed two scenarios For Europe to help buyers with planning short-term business and technology investment.

These were "a probable one in which the extent of the coronavirus is broadly contained in the next few weeks, and a pessimistic one that considers a less controlled 'domino' effect on a global scale", he added.

In the most probable scenario, Europe's ICT spending was projected to grown by 1.4%. "When taking a broad historical view of European ICT spending across the past decade, the impact of the COVID-19 crisis has not reached the levels of the 2007–2008 financial crisis yet. However, it does represent the first strong deceleration in spending growth since the European debt crisis in 2013-2014," said Giorgio Nebuloni, associate vice=president at IDC Europe.

He said the new outlook was shaped mainly by lower expectations in hardware and services, with the former set to suffer due to restriction measures hampering supply and production and an overall reduced demand

As far as the services market was concerned, Nebuloni said, the biggest effect would be due to businesses postponing decisions on pending projects and slowing execution of projects which were still in the delivery phase.

The software and telecoms markets would be affected too, but these effects were less evident and some positive factors were expected to largely negate the natural downturn.

"While the decrease in hardware spending will also negatively impact the overall software market to a degree, difficulties prompted by COVID-19 across industries will impact total telco connections," IDC said.

"At the same time, the increasing need for remote collaboration will push telco services demand and drive new opportunities in the collaborative applications and platforms areas, as well as an increase in security technologies that enable them."

In its pessimistic scenario, IDC said it anticipated European ICT spending to drop to a flat 0.2% growth in 2020, with all areas apart from software showing negative trends.

"A series of domino effects, including oil price changes, currency depreciation, the inability of governments to make timely payments, delays in the supply chains and lay-offs in both public and private sectors would lead to a much more dramatic impact on the overall ICT European market and an exponential increase in the downside risk in IDC Market Forecast assumptions," the market intelligence provider said.

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Sam Varghese

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Sam Varghese has been writing for iTWire since 2006, a year after the site came into existence. For nearly a decade thereafter, he wrote mostly about free and open source software, based on his own use of this genre of software. Since May 2016, he has been writing across many areas of technology. He has been a journalist for nearly 40 years in India (Indian Express and Deccan Herald), the UAE (Khaleej Times) and Australia (Daily Commercial News (now defunct) and The Age). His personal blog is titled Irregular Expression.

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