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Revised IT Services 2020 Market Forecast: Bleak?

The coronavirus (COVID-19) pandemic will impact the IT services sector in a “deep, immediate, and long-lasting” way, according to GlobaData’s revised Tech, Media & Telecom Trends 2020 report.

In a prepared statement,  Stuart Ravens, chief analyst for thematic research at GlobalData, said:

“The coronavirus will put incredible strain on the world economy, which will be effectively halted for three months or more. Many companies will not survive this initial phase. For IT services companies asking where new business will come from in 2020, the answer is painfully bleak: There will be none.”

Still, it’s important to put the research findings in context.

Enterprise IT Services Market Forecast

GlobalData’s report looks at some of the world’s largest IT services providers — such as Accenture, Capgemini, Cognizant, DXC, Infosys, NTT, Tata and Wipro, among others. All of those companies generate some recurring revenues from managed services. But many of those companies remain deeply dependent on IT projects and consulting services.

Accenture, for one, says it has taken proper business steps amid the pandemic.

Still, ChannelE2e believes some IT service providers could see some project revenues dry up as enterprises seek to cut costs and retain cash. Also, it’s a safe bet many enterprise customers will reconsider IT outsourcing deals vs. keeping key projects in-house. In some cases, internal staff could face job cuts and IT service providers will become more strategic. In other cases, we could see enterprises cut ties with IT partners to hunker down with internal staff.

Here’s a complete list of companies covered in GlobaData’s report, along with key sectors that each IT service provider addresses:

MSPs and Small Business Customers

In stark contrast, the report did not cover the SMB IT services market, where many small businesses lack IT employees and fully outsource their technology operations to MSPs (managed IT services providers).

The big MSP wildcards amid the pandemic:

  • Which SMBs will remain in business, and which ones will shutter amid economic restrictions designed to flatten the coronavirus outbreak wave?
  • As some SMBs cut staff, how will that impact MSP per-seat revenues?
  • Which SMBs will continue paying their monthly IT services bills?
  • Can MSPs fully pivot to 100 percent remote support with no on-premises visits?

Amid those business variables, MSPs should make these seven business changes immediately, ChannelE2E recommends.

Small Business Administration (SBA) Loans

Meanwhile, the Small Business Administration (SBA) is offering emergency loans to assist small businesses through the coronavirus crisis. But Bloomberg Radio estimates it can take roughly 30 days for small businesses to receive such loans — at a time when the typical small business has only about 14 days of cash on hand, the report said.

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