NZ tech spending during the pandemic - and the forecast for next year

There was a work-from-home boom in 2020. Photo / 123RF

Spending on information technology will rebound this year after a dip in 2020 - and grow strongly in 2022, Gartner says.

The market research firm says total IT spending in New Zealand dipped 1.6 per cent to $12.5 billion in 2020.

The outbreak saw several competing trends in IT, with some firms putting major upgrades on hold amid recession fears, but other accelerating shifts to cloud-based systems amid the work-from-home boom - which helped to make enterprise software the only area of growth.

The remote working spike also saw PC sales hit an all-time high.

But many cut spending elsewhere to fund that new laptop or monitor. Smartphone sales crashed. For example, in the three months to September 2020, total NZ smartphone sales were 155,000 handsets, crashing by almost half from Q3 2019's 308,000. Top smartphone makers Apple and Samsung were able to stockpile chips (at the expense of the slower-moving car-makers), avoiding delays - but in the handset market demand cooled regardless (Apple managed a record year in NZ and worldwide regardless as tablet and Mac sales boomed).

From spending so far this year and its forecast, Gartner is projecting a 2.7 per cent increase in NZ IT spending to $12.8b this year - which would represent an increase over pre-pandemic levels (total NZ IT spending in 2019 was $12.7b).

And in 2022, it sees a 5.7 per cent lift to $13.6b. A bounce-back on spending on devices and a further lift in enterprise software spending is forecast, with Gartner predicting a boom in spending on social software, collaboration platforms, and HR software as firms shift to hybrid workplaces.

Gartner sees a broad drive to digitisation, accelerated by the pandemic, with businesses looking to cut over-heads long time by moving from inhouse to cloud-based IT systems.

Cloud spending could get a lift in 2022 as New Zealand's first giant or "hyper-scale" data centres come online. Half Infratil-owned Canberra Data Centres is spending $300m-plus on two huge server farms in Auckland's northwest, while its partner Microsoft has begun construction on a $100m-plus build in the same region.

Mobile infrastructure spend is also on the rise, with Spark and Vodafone accelerating 5G upgrades that were crimped by Covid restrictions last year, and 2degrees set to begin its upgrade to the faster cellular technology later this year.

But while Gartner sees all categories of IT spending growing over 2021 and 2022, it is also expecting "a K-shape recovery".

"From an industry perspective, banking and securities and insurance spending will closely resemble pre-pandemic levels as early as 2021, while retail and transportation won't see the same recovery until closer to 2023," Gartner analyst John-David Loveock says.

Worldwide, Gartner sees IT spending recovering from a 2.2 per cent dip in 2020 to grow 8.4 per cent this year to $4.07 trillion, with 5.5 per cent growth in 2022.