Global IT services spend shrank less than expected in 2020, declining 1.16 percent year over year but remaining above $1 trillion, according to IDC’s Worldwide Semiannual Services Tracker.
The analyst company expects a “strong rebound” over the next two years with growth for both 2021 and 2022 forecast at around 4 percent.
This is notably higher than the company’s September prediction of a 2 percent growth in 2021 and a 3.2 percent growth in 2022.
This improved forecast comes due to Q3 and Q4 of 2020 seeing higher revenue than expected, a brighter economic outlook, growing business confidence, and the digital ‘new normal’ for IT and business services brought about by the pandemic, according to an IDC statement.
It pointed out that despite most top vendors taking a hit in growth over Q2 and Q3, the 2020 IT services market decline was softer than the decline in global GDP. As economic forecasts predict a quick recovery, services spending is expected to resurge in developed markets.
Large government initiatives and businesses’ confidence in the handling of the pandemic at this stage are driving much of this growth, as well as the massive shift to digital for both organisations and consumers.
For mature markets, Asia Pacific growth expectations remain higher than other regions. Australia’s near- to mid-term growth prospect has improved due to a stronger than expected 2021 recovery.
The news is not so good for emerging markets in the region, which will see faster growth but long-term prospects are still shy of pre-pandemic levels.
"While 2020 has been a challenging year for services vendors both from a supply and demand side, the overall services market remained resilient and major vendors are reporting stronger bookings and pipelines," said global services markets and trends program director Xiao-Fei Zhang.
"Looking forward, while the recovery will be uneven between mature and emerging markets, and the threat of inflation still lurks, a strong recovery this and next year is still expected."