Forrester forecasts tech spending could decline by up to 9%

Forrester predicts that, due to the coronavirus and resulting recessions, tech spending in Europe will decline by 5% to 7% in 2020 from 2019 levels in the most optimistic case.

Three countries – the UK, France, and Germany – were evaluated, with the UK found to be the most vulnerable out of the three, with a deeper decline in 2020 and continued, but slightly less negative, declining growth in 2021. France and Germany, meanwhile, are said to be more likely to experience modest recoveries in 2021.

Across all three countries, the impact of the coronavirus on tech spending will vary depending on their approach to managing the pandemic, their economic stabilisation programmes, and pre-existing economic and political conditions.

Duncan Jones, VP and principal analyst at Forrester, commented, “With limited budgets, CIOs will have to make tough choices between rival claims for priority. Competition for business will be tough, so the top priority should be operational improvements that really matter to customers. Great deals will be available for CIOs that are willing and able to invest in innovation. However, risk mitigation is also important, such as planning what you will do if one of your smaller software providers is unable to survive a big drop in its cash inflow.

“For the tech industry, there’s an opportunity to put long term customer relationships ahead of short-term revenue. Customers won’t forgive vendors that hold them now to contracts they no longer need and cannot afford.”

Key findings for the UK include:

  • The UK will be most heavily impacted, with an expected tech decline under the more pessimistic scenario of 9.3% in 2020 and a 1.1% decline in 2021.
  • The UK is more vulnerable because of the country’s delayed pandemic response, its problematic testing program, and its narrower income support packages.
  • The most likely scenario will see computer equipment sales drop by 9%, communications equipment by 11%, and software spending by 10%.
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Charlotte Hathway

Charlotte is the editor of Comms Business and writes content that looks to inform and educate the Channel about the latest technology and business developments across the industry. Prior to her current role, she wrote for other MA Business titles New Electronics, Land Mobile and Critical Communications Today. Before moving into journalism, she spent five years working in public relations and has worked with various technology companies spanning telecommunications, cyber security and software development.

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