IT spending expectations of businesses have declined globally during May, even with a slight improvement in market indicators as more countries begin to move towards a COVID-19 recovery phase.
In fact, businesses in most countries were found to have less confidence in their own IT spending than the economy as a whole. This is according to the June edition of the IDC COVID-19 Tech Index, which uses an index score of 1,000 as a baseline confidence level, of 953, down from May’s score of 964.
Stephen Minton, vice president of IDC’s customer insights and analysis group, said the scale of the short-term impact of the coronavirus pandemic has been worse than some businesses expected.
"In fact, survey results are now closer in line with market indicators in terms of the scale of IT spending decline projected for 2020 as a whole," he said.
The outlook for recovery in the second half of the year was labelled by Minton as “unpredictable”, with the potential for a second wave of coronavirus infections generating anxiety, creating volatility in future survey results.
"The first phase of this crisis was uniformly bad for everyone, but the next chapter will be very localised and dependent on a delicate balance of medical and economic factors,” he added. “Not surprisingly, the latest survey results support a sense that IT buyers remain cautious in this type of economic climate and continue to be vigilant in the near term.
“Moreover, we have now entered a phase where some companies are being forced into bankruptcy or employee reductions, which will have inevitable implications for tech spending in the second half of the year."
On a regional basis, buying confidence was previously improving steadily in Asia Pacific, but has since declined. IT spending in China is still set for a rise, but confidence levels dropped in India and Korea, the latter of which saw infection numbers increasing after easing lockdown measures.
In the US, confidence levels were weak and have continued their downward trajectory since the start of the coronavirus pandemic. A slight boost of overall economy confidence over the last two weeks was noted, while confidence in businesses’ IT budgets were down for the year as a whole.
Here, spending declines for PCS, peripherals, software applications and project-oriented IT services are expected to see “significant declines”, according to IDC.
Diminishing confidence was also noted in Europe, particularly in France, Italy and Russia.