Forrester is warning CIOs to prepare for a longer US downturn, with more severe IT spending cuts in 2020 and into 2021. As they have done before, they are outlining three scenarios:
- Scenario A (10% probability): After a short drop in spending, budgets would see a strong recovery in the fourth quarter and into 2021.
- Scenario B (70% probability): A 6.3% decline in 2020 U.S. tech budgets from 2019 levels.
- Scenario C (20% probability): 9% decline in 2020 U.S. tech budgets from 2019 levels and 5% drop in 2021
Digging into that most likely scenario B, this forecast sees the IT cuts move from already hard-hit industries like travel, leisure and consumer-facing retail to sectors like financial services, insurance, professional services, education and healthcare.
Why do we care?
This is a slightly surer projection than their versions earlier in the year – 60% was the most last time.
I’m still anticipating longer term rough waters – and the insight I’m taking away from Forrester here is that the cuts are expanding. It feels inevitable that with sections of the economy severely impacted that those impacts will spread. There’s a theme to the list – businesses that have a component of face-to-face contact. That’s a lens to apply.
Cross reference this with the data we’ve previously discussed about the companies that are doing well – they have managed expenses proactively and have leaned into compensating for potential revenue losses. Those 2021 plans should be assuming these drops.