COVID-19 to affect enterprise ICT spending in New Zealand

Buying decisions re-looked at due to an increased focus on profitability amidst the uncertainty.

ICT spending in New Zealand is estimated to register a 6.3 per cent year-on-year decline to reach US$9.5bn in 2020, against the initial estimated growth of 9.6 per cent before the COVID-19 outbreak, according to GlobalData.

An analysis by the data analytics company Market Opportunity Forecasts Model reveals, ICT spending across all infrastructure segments, which includes hardware, services and software will decline as enterprises defer their purchase decisions.

Gopi Srikanth senior technology analyst at GlobalData said the few enterprises that are looking to maintain their pre-outbreak upgrade timelines, the COVID-19 outbreak has caused supply chain constraints that will affect the availability of hardware.

“The market for ICT services in New Zealand too will decline in 2020, as enterprises revisit their buying decisions owing to an increased focus on profitability amidst the uncertainty,” he said.

Looking at the sector-wise implications of the COVID-19 pandemic, spending across consumer goods, food-service, transport and logistics, and travel and leisure will bear the maximum brunt in 2020. The consumer goods sector, which accounted for 9.2% of the overall ICT spend in 2019, will also witness a 13.2 per cent decline in ICT spend in 2020.

“A few segments, however, including public cloud (comprising of SaaS and PaaS) will continue to grow as enterprises in New Zealand leverage public cloud to effectively manage their processes such as the recovery of data and safe backup systems,” he said. “Similarly, the market for enterprise social networking and collaboration platforms is set to increase by 22.5 per cent in 2020, owing to the demand for collaboration due to remote working requirements.”

On the other hand, the demand for software will fall, with enterprises delaying the roll-out of applications. Almost all products/solutions categories are expected to witness reduced demand in 2020, as compared to the high growth projections before the outbreak.

=“In the short-term, the domestic ICT market will see increased demand for cloud computing and collaboration tools suited for the remote working models to ensure business continuity,” he said. “The long-term recovery is, however, expected to be primarily driven by accelerated digital transformations in verticals such as consumer goods, manufacturing, government, transport and logistics over the next four years. GlobalData expects demand for mobility software, smart chatbots, delivery apps, and artificial intelligence software to grow during the forecast period 2019-2024, which should provide a significant boost to the New Zealand ICT market.”








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