The services that slowed Australian IT growth in 2020

Spend on IT services flattens in Australia, as outsourcing and custom application development decline. IDC sees higher growth in 2021.

Slow binary snail.

IT outsourcing and custom application development were the IT services areas that slowed the market growth during the first half of 2020 in Australia, according to IDC. In total, Australia’s IT services market saw a 2.1% growth in the first half of the year.

IDC divides the services market into three primary markets: managed services, project oriented, and support services. IT outsourcing falls within managed services, and custom application development falls within project-oriented. All other areas saw growth.

Within managed services, hosted infrastructure, hosted application, and network management services all experienced increase in activity. According to the research firm, this comes as businesses are forced to adjust to new ways of working during COVID-19, with significant reliance on network, connectivity, and endpoint tools to ensure business resiliency.

COVID-19 accelerated e-commerce, driving the need for customised and hosted applications for online purchasing. The acceleration in adoption of multicloud andhybrid cloud strategies leads to organisations relying on managed cloud services providers to manage more complex environments, also lending resilience to the cloud hosting-infrastructure space, IDC said.

Associate market analyst Emily Lynch told Computerworld Australia that IDC is assuming that the behaviour seen from Australian businesses in the first half of 2020 represents the majority of businesses operating in the ‘business continuity’ and ‘cost optimisation’ phases of the business response to the pandemic—weathering the initial shock of the COVID-19 outbreaks and restrictions and the subsequent economic slowdown. “This led to businesses reducing discretionary spending and pausing large projects, dampening market activity, to weather and emerge from the crisis,” she said.

IDC expects to see growth beginning at the end of 2020 and through 2021, with organisations making targeted and strategic investment to shore up areas of weakness exposed during COVID, position themselves for a strong recovery, and position themselves competitively within their market in the immediate future.

Lynch said the legacy of the pandemic will really be seen in an acceleration to the cloud, increased automation in IT and business processes, and agile implementation.“Australia’s strong health response to managing COVID-19 gives both business and consumer sentiment positive momentum moving forward. It is less a direct comparison of whether the market was stronger in 2019 than an analysis of shifting IT services areas of investment in response to the pandemic in 2020-2021.”

The Australian IT market is expected to reach $29.2 billion in 2020, IDC said, or 1.5% growth. For 2021, the research firm predicts 2.7% growth for Australia.

Copyright © 2020 IDG Communications, Inc.

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