COVID-19 to impact IT and business services revenue, says IDC

The global IT and business service sectors are to take a major hit from COVID-19 after two years of accelerated growth, according to the IDC’s Worldwide Semiannual Services Tracker.

The report forecasts a 1.1% drop in revenue for the worldwide services market in 2020, and a rebound of just 1% in 2021.

This is based on the Economist Intelligence Unit’s projection that GDP will contract by more than 2% in 2020, following a sharp decline in Q1, and an uptick in Q3 and Q4.

The projections are a sharp contrast from last year’s figures, in which the sector enjoyed a 5% year-on-year revenue increase — well above the 3% GDP growth of that same year.

Likewise, previous years were strong with growth of 4.2% in 2018 and 4% in 2017.

In 2019, large services vendors were also getting stronger bookings and book-to-bill ratios — mostly above 1 — reflecting an increased appetite for digital transformation and general market optimism.

The demand-side shock of COVID-19 will mostly impact Europe, the Middle East and Africa, says the IDC. Asia Pacific will take less of a hit, contracting in 2020 but picking up soon thereafter.

Meanwhile the impact on the supply side will be relatively small, especially for enterprise services.

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