News

Remote Work To Drive Higher Cloud, IT Services Spending in 2021

• By Kurt Mackie
• October 16, 2020

Global tech spending has taken a hit in 2020 due to the COVID-19 pandemic, but analysts expect it to rebound next year.

That's a key takeaway from updated stats announced this week by research and consulting firm IDC. According to the company, the COVID-19 pandemic reaction caused worldwide revenue in the IT and business services sector to shrink by 1.9 percent in the first half of 2020 compared to the same period last year. By year's end, IDC is forecasting a 2.3 percent decrease in IT and business services revenue. The forecast is based on IDC's "Worldwide Semiannual Services Tracker" research.

Nonetheless, in 2021, IDC expects to see a 1.9 percent growth rate for this sector. That prediction is based, in part, on some vendors having reported "strong bookings" in Q2, plus a perception that companies have been more accepting on making digital technology shifts, given work-at-home scenarios.

"Most vendors believe that in the long run the crisis is a net-positive with the COVID-19 crisis tipping organizations and consumers over to the digital world," IDC's announcement explained.

The announcement described regional differences in revenues, but suggested that "all regions are forecast to return to growth in 2021 and return to pre-COVID-19 levels over the next few years."

$1 Trillion Cloud Spend in 2024
In a separate announcement this week, IDC described its predictions on worldwide cloud services spending over a five-year period. Cloud spending revenue from all sources will exceed $1 trillion in 2024, it predicted, representing a 15.7 percent compound annual growth rate (CAGR). The data come from IDC's "Worldwide Whole Cloud Forecast, 2020-2024" report.

Such growth is expected to accelerate by the end of next year, according to Richard L. Villars, group vice president for worldwide research at IDC. 

"By the end of 2021, based on lessons learned in the pandemic, most enterprises will put a mechanism in place to accelerate their shift to cloud-centric digital infrastructure and application services twice as fast as before the pandemic," Villars said in a released statement.

Growth will mainly occur in the public and private cloud services category, the largest one tracked by IDC, with a five-year CAGR of 21 percent. The next largest category, cloud-related professional and management services, will have a five-year CAGR of 8.3 percent, mostly slowed down by the use of automation solutions for cloud migrations. The category that includes hardware and software used by enterprises and cloud service providers will have an 11.1 percent CAGR over the five-year period.

Forrester's 2021 Predictions
Meanwhile, research and analyst firm Forrester this week announced some its market predictions for the next year.

U.S. spending on technology is expected to decrease by 1.5 percent in 2021, per Forrester's announcement. The spending that will occur will mostly be focused on cloud services, security, networks and mobile solutions.

The work-from-home trend will continue. Remote work is expected to increase 300 percent compared with pre-COVID values. Forrester also sees contention on the horizon concerning employee privacy.

"The pandemic is igniting employers' desire to collect, analyze, and share employee personal data," it noted.