COVID-19 Disrupts Worldwide Services Market Growth

In April, International Data Corporation (IDC) forecast worldwide IT services and business services revenue would decline 1.1% year over year in 2020 due to the impact of the COVID-19 pandemic, the company said.

In a new update to the Worldwide Semiannual Services Tracker, the market is now forecast to shrink further, declining 2.8% this year. However, the 2021 growth rate has improved slightly from 1% to 1.4%, reflecting IDC´s optimism for a market rebound.

The newest forecast is based on the Economist Intelligence Unit´s May forecast for worldwide GDP in 2020, which will likely contract by around 4.4%, more than twice as much as the March forecast. After almost four months of shutdowns across most developed markets, the economic downturn in the first half of 2020 will be so severe that even a robust recovery in the next six months will not offset it.

IDC´s view on the supply side remains largely intact. Even as the major delivery countries (India, the Philippines, Czech Republic, etc.) were shutting down, services providers adapted quickly to working from home at scale and hatched contingency security plans. Buyers also have largely been quick to sign off on these plans. The transition has been a predominantly smooth one without major disruptions. Most providers see the COVID-19 crisis tipping organizations and consumers over to the digital world — a net positive in the long run.

The downward adjustment in market size was largely attributed to a bigger demand-side shock. The scale and duration of the lockdowns are better reflected in these updated economic metrics. All major markets, according to May´s GDP forecast, are suffering greater economic slowdowns or steeper declines compared to projections made in March.

IDC Tracker products provide accurate and timely market size, vendor share, and forecasts for hundreds of technology markets from more than 100 countries around the globe. Using proprietary tools and research processes, IDC´s Trackers are updated on a semiannual, quarterly, and monthly basis. Tracker results are delivered to clients in user-friendly excel deliverables and on-line query tools.

International Data Corporation (IDC) is the premier global provider of market intelligence, advisory services, and events for the information technology, telecommunications, and consumer technology markets. To learn more about IDC, visit www.idc.com.