Coronavirus Wipes $47 Billion Off Technology Spend

NEW YORK: When the top-of-the-bill Mobile World Congress (MWC) cancelled this year, it was followed in quick succession by many major IT shindigs due to the coronavirus. But who could have envisioned just what an impact the pandemic would have in only two months? Now, due to COVID-19, the global economy is looking down the abyss of a two percent economic contraction in 2020.

As it stands, the global technology channel delivers US$2.26 trillion to the economy, or 64 percent of total customer spend. 

Even a minimum two percent recession in the US economy would see US47.36 billion wiped off the total US$880.5 billion spend in technology through the channel, according to Jay McBain, principal analyst at Forrester and published by ARN. 

Unfortunately, judging from the present situation, there is a 50pc probability that US and global tech markets will decline by more than two percent in 2020 if a full-fledged recession begins, according to McBain.

This could affect more than a quarter of resellers, value-added resellers, independent software vendors and managed service providers (MSPs) around the world. 

“We have observed models where one-fourth of all technology partners either lose money or struggle to break even (in good economic times),” he said. “These partners are the most exposed in this scenario and are least likely to get additional capital or other lifelines.” 

IT organisations are already starting to feel the effects of the virus’s spread, as government-mandated social distancing and isolation measures start to bite both productivity and customer spending.

Despite the dire situation, there are some silver linings for partners, with IDC predicting that demand for computing and storage cloud services would still see growth. 

Partners are looking for increases in spending on specialised software, communications equipment and telecom services as white-collar companies encourage workers to work from home and schools and move to online courses.

“If we use the unified-communications-as-a-service (UCaaS) market as a bellwether to the new normal, the results we are seeing this week are mind-blowing,” elaborated McBain.