Canada is expected to spend up to C$28 billion on digital transformation in 2020 despite the challenges presented by Coronavirus, according to a new study released by the International Data Corporation (IDC).
The spending will mark a 7% increase compared to previous years.
The growth is notably slower than 2019 however, Canada is expected to recover quickly between 2021 and 2023 with a five-year CAGR of 13%.
The top three sectors leading in terms of spending in 2020 include robotic manufacturing, intelligent and predictive grid management – electricity, and 360-degree customer and client management.
The spend of robotic manufacturing is projected to be $813 million in 2020.
The resources industry will record a significant drop in growth of between 2% and 18% due to the dramatic collapse in oil and gas prices and the price war between major global vendors.
Technology services sector is expected to continue to lead and account for 47% of the total 2020 market, leaving the rest of the market to hardware and software.
IT services will take up close to half of the market whilst the hardware market will experience the largest downturn, with a 14% drop in growth rate in 2020 – compared to the pre-COVID-19 forecast, largely due to global supply chain disruptions.
The software market is more resilient, with work-from-home policies in place. There will also be an increasing demand for software to facilitate team collaboration and workflow management. The market share of software in 2020 will grow by 1% and is expected to reach over 25% in 2023.
Meng Cong, research manager with IDC, said: “COVID-19 has wiped off more than C$20 billion of Canadian DX technology investment between 2020-2023 from our pre-COVID-19 forecast.
“Yet despite these losses, pockets of growth opportunities exist across most industries when diving deep into specific use cases that solve specific business problems. A few examples include virtualized labs in education, advanced digital simulation in transportation, remote health monitoring in government, and digital visualization in education.”
Jim Westcott, research manager with IDC’s Canadian Digital Transformation: Application and Professional Services, adds: “COVID-19 has impacted the Canadian economy in a number of ways, including how businesses have prioritized spending on existing and new IT projects and technologies.
“Digital transformation has emerged as a valuable solution to the business challenges posed by COVID-19. Canadian organizations have had to create long-term strategies for the post-pandemic era and DX initiatives that are fulfilling these requirements.”