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IDC warns of deep impact of COVID-19 on the European technology market

The most recent IDC analysis reveals that the Coronavirus pandemic (COVID-19) and the measures put in place to contain the spread of the disease will profoundly affect the European technological market. In a scenario as dynamic as the current one, where there is still no certainty about the impact of the pandemic, analysts predict that the investment of European companies in technologies will decrease from 2.8% to 1.4%.

As the crisis sets in in almost all European economies, IDC analysts point to two possible scenarios. In the first, seen by experts as the most likely, the spread of the SARS-CoV-2 virus, which causes the disease, is controlled over the next few weeks. The second, more pessimistic, predicts an uncontrolled dominant effect on a global scale.

IDC forecasts for the European technology market in 2020 credits: IDC

IDC clarifies that, in the most likely scenario, the European technology market will not achieve a similar slowdown to the financial crisis of 2008. However, the hardware market is expected to be affected due to restrictions imposed by governments, and there are also a reduction in production.

Services in the technology area will be affected by the postponement and slowdown of projects. Analysts estimate that the impact on the telecommunications and software markets will not be as strong, with some positive factors being able to mitigate it. For example, the growing need to work remotely can create opportunities in the sector, as well as in cybersecurity.

In the most pessimistic scenario, IDC analysts predict that investments in technology will be around 0.2%, with all sectors of the market with the exception of software showing negative trends.

IDC clarifies that changes in oil prices, devaluation of currencies, delays in production chains, the inability of governments to make timely payments and redundancies in the public and private sector could have a dramatic impact on the European technology market.

The digital maturity of the industries will be another factor that may have an impact on technological investment, regardless of budgets. Analysts indicate that limitations on the relationship between sellers and consumers will inevitably reduce investment in digital transformation projects in less mature organizations.

Reduced social contact will also have negative consequences for consumers, as there will be a reduction in their purchase options. IDC advances that the impact will be considerable in less technologically advanced countries, which will lose, step by step, access to technological innovation.