IDC sees India's IT spending drop by 4.5% in 2020 amid COVID-19 pandemic

India's domestic IT spending on hardware, software and services is expected to drop by 4.5 percent in 2020 impacted by the coronavirus pandemic, according to research firm IDC.

The forecast decline compares with 2019 growth rate of 9.1 percent as per IDC's Worldwide Black Book Live Edition, March 2020.

IDC said the hardware segment will contribute the most to this decline.

It said growth in spending on software this year is expected to drop to 4.1 percent due to the impact of COVID-19 pandemic, as compared to 2019 growth rate of 16.7 percent as enterprises re-look at their buying decisions owing to increased focus on profitability. Growth in IT services is expected to be almost flat at 6.9 percent as enterprises look at maintaining the status quo on IT services contracts, it added.

IDC said there will be a demand for productivity applications as the remote workforce increases.

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Collaborative application vendors are looking at making minor adjustments and offering the premium version through a minimum price subscription model.

Apart from collaborative tools, cloud platforms, security solutions, automation technologies, and most of the other applications will post only marginal growth, it added.

On the IT services side, endpoint and network services will witness a stronger demand because of extended remote working options.

"Hardware and software implementation or integration services will be slightly impacted because of the non-deployment/non-availability of new hardware or software. Implementation and integration services will be severely impacted," IDC noted.

New outsourcing deals or renewals will be shelved because of financial duress impacting the growth of the managed services market, it added.

"IT vendors are gearing up to adapt and transform the way of doing business, in a bid to support their clients during these testing times," IDC India Senior Research Manager (Enterprise Software & IT Services) Shweta Baidya said.

Although IT spending will be impacted, specific solutions such as conferencing and collaboration, secure endpoint and network management, CRM, cloud storage, back-up and recovery solutions, and remote support and services will continue to witness a steady rise amidst the crisis, she added.

"Enterprises are investing in solutions that enable their remote workforce to remain productive without service disruptions," she said.

IDC said renewal of long-term IT services contracts will be delayed by a few quarters and organisations will adopt a wait-and-watch approach for non-critical IT spending.

However, enterprises are also looking at cloud options for business continuity, infrastructure services, and application management.

The COVID-19 pandemic has led to an unprecedented situation globally. It could be an economically catastrophic event, forcing enterprises to re-look at their IT spend. Focus of chief executives will shift to initiatives that impact operational agility and resiliency, and hence, digital transformation strategies will be recalibrated, IDC said.

"The COVID-19 pandemic has created significant disruption to the economy across the globe, leading to tectonic shifts in how the business will be conducted and leverage IT for accelerated transitions. Digital transformation has again become the centrepiece for all boardroom discussions as enterprises adjust to a new world in which all businesses are virtual. Enterprises are evaluating software-as-a-service (SaaS) and cloud models to facilitate business in a digital world," IDC India Research Director (Enterprise Solutions and ICT Practices) Sharath Srinivasamurthy said.