Coronavirus takes toll on IT spending in Asia

The economic fallout from the Covid-19 coronavirus outbreak is expected to shave at least four percentage points off the growth rate of the IT industry in Asia-Pacific excluding Japan and China (APEJC) this year, according to IDC.

Citing early indicators from its first-quarter research, the research firm estimated that growth in APEJC IT spending in 2020 will plunge to 1.2%, down from its earlier projection of over 5.2% in constant currency terms.

The higher growth projected earlier was attributed to the expected boost in hardware, software and services spending on infrastructure as more enterprises embark on digital transformation initiatives.

Globally, IT spending is expected to grow at a rate of 1.3% compared with the earlier prediction of 5.1%, with China most affected. IDC expects its growth forecasts to decline further due to the extended uncertainty period and rising number of Covid-19 infections globally.

“Some of the biggest impact we have seen as a result of Covid-19 are the changing demands on technologies, processes and mindset as they relate to work-from-home [WFH] mandates and supply chain disruptions,” said Sandra Ng, group vice-president at IDC Asia-Pacific.

These supply chain disruptions are already affecting production of hardware devices, such as PCs and smartphones, which account for about 80% of overall hardware spending in the region.

“Sales of devices will be significantly impacted under a pessimistic forecast, creating both a supply-side production crunch as well as increasing demand-side challenges as the virus spreads to other countries,” said IDC.

Software spending will also slow down due to the impact of the coronavirus on transportation, manufacturing, retail, and personal and consumer services, delaying discretionary spending on software licences.

IDC said the impact would be seen across all software markets, including application development and deployment, and system infrastructure software – except digital workplace, cloud platforms and automation technologies, which can aid in the current situation.

Although the outbreak is affecting enterprise IT spending, it has heightened the need for enterprises to bolster remote working capabilities and digital collaboration infrastructure, said IDC.

Indeed, technology suppliers like Poly are already seeing an uptick in demand for its conferencing products.

Bill Zeng, Poly’s Asia-Pacific chief technology officer (CTO), said the supplier has seen “a surge in demand for both personal and group collaboration solutions such as video-conferencing and audio-conferencing solutions, as well as our enterprise-grade headsets and portable speakers”.

“The scale and speed of the outbreak was unexpected, and many users didn’t have a proper home office setup. Their home office might have a noisy environment, messy background and bad lighting,” he told Computer Weekly. “Headsets with advanced technologies like noise cancelling and speaker tracking allow users to collaborate effectively and productively from their home.”