Market research firm International Data Corporation (IDC) has revised its forecast for European enterprise spending on blockchain technology due to the economic effect of the COVID-19 pandemic.
The report captures blockchain spending for the next few years following the pandemic. The IDC reduced its forecast and expects the downshift to be short and unevenly distributed across sectors.
The IDC expects an 8% decline in blockchain spending in 2020 for the European market. This revised forecast of $1.33 billion also means over 60% growth for the year.
Before the pandemic, the IDC estimated that blockchain spending in Europe would reach $1.45 billion in 2020, with 58% compound annual growth rate (CAGR) to 2023. Global blockchain spending was also predicted to reach $16 billion within the next three years.
Carla La Croce, IDC European Blockchain Practice co-lead, explained that factors like decreased customer demand, disrupted supply chains, and remote working made companies put a hold on researching and developing innovative projects like blockchain until there is more stability in the economy.
“The pandemic and the subsequent lockdown have had a negative impact on many industries, and we expect a significant slowdown in technology spending due to a pause in investments across companies and prioritization of urgent expenses,” La Croce said.
Due to the pandemic, technology-led transformation projects are being revised to drive efficiency and ROI, and three outcomes are expected as a result: re-evaluation of investment to assess the possibility of achieving better efficiency while lowering costs; leveraging existing internal resources and technology investments to eliminate undue costs and focus resources on more critical areas; and maintaining only projects that deliver significant and consistent ROI or projects that secure short-term business continuity.
The IDC pointed out that despite a decline in blockchain innovation due to fewer exploratory projects, blockchain could help mitigate COVID-19 effects in some sectors. This includes areas like supply chain, complex applications like the collection and analysis of healthcare data, and online voting systems.
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