As the effects of COVID-19 continue to reverberate across the globe, data shows a worldwide decline in IT spending among federal and central governments this year. However, IT expenses related to COVID-19 working changes are up.
While global government IT spending fell about $2.5 billion across hardware, software, and IT services between January and April, the expenses surrounding “work-from-home and cloud-based tools, network upgrades to increase bandwidth for external connections; videoconferencing; IT and supply chain security; automation solutions; and grants and acquisition management” did increase, according to Nextgov. The area that took the hardest hit was datacenter equipment, falling 9.7 percent sequentially, though some say it’s expected that hardware purchases may be prioritized over software looking forward. Additionally, colocation providers are expected to continue to do well, as their customer base is mostly comprised of larger businesses and high-credit tenants.
The story has been slightly different for the U.S., which actually saw higher increases in hardware and spending during that period, with a significant decrease of $1.1 billion in IT services spending.
As COVID-19 cases continue to rise in the U.S. with projections of even more outbreaks to come in the fall and winter, it’s likely that these patterns will continue to hold. Experts suggest government networks will expand in the long-term, with initial focus on home connectivity improvement and integration of multiple cloud services through better virtual private networks. Additional spending is expected in telework and teleconferencing solutions, network connectivity, security, and cloud-based file sharing. Spending for supply chain monitoring and management systems for health products and solutions is also expected to increase.
A full report on global and U.S. federal spending in response to COVID-19 has been published by IDC. According to Gartner, global IT spending overall is expected to decline 8% in 2020, down to about $3.4 trillion from nearly $3.8 trillion in 2019. These spending patterns indicate CIOs are focusing on critical initiatives over growth-oriented or transformative technology and services investments, as they take emergency measures to keep their businesses running.