Worldwide IT spending is projected to total US$4.6tn in 2023, an increase of 5.5% from 2022, according to the latest forecast by Gartner, despite continued global economic turbulence.
“Macroeconomic headwinds are not slowing digital transformation,” said John-David Lovelock, Distinguished VP Analyst at Gartner. “IT spending will remain strong, even as many countries are projected to have near-flat gross domestic product (GDP) growth and high inflation in 2023. Prioritisation will be critical as CIOs look to optimise spend while using digital technology to transform the company’s value proposition, revenue and client interactions.”
Double-digit growth for software segment in 2023
According to Gartner’s report, the software segment will see double-digit growth this year as businesses prioritise spending to capture competitive advantages through increased productivity, automation and other software-driven transformation initiatives. Conversely, the devices segment will decline by nearly 5% in 2023, as consumers defer device purchases due to declining purchasing power and a lack of incentive to buy.
As organisations navigate continued economic turbulence, the split of technologies being maintained versus those driving the business is apparent in their position relative to overall average IT spending growth.
“CIOs face a balancing act that is evident in the dichotomies in IT spending,” said Lovelock. “For example, there is sufficient spending within data centre markets to maintain existing on-premises data centres, but new spending has shifted to cloud options, as reflected in the growth in IT services.”
The IT services segment will continue its growth trajectory through 2024, largely driven by the infrastructure-as-a-service market, which is projected to reach over 30% growth this year. For the first time, price is a key driver of increased spend for cloud services segments, rather than just increased usage.
Exposure from bank failures remains contained, but tech CEOs must prepare for disruption
The collapse of Silicon Valley Bank, Signature Bank and Credit Suisse created a shockwave within the banking and tech industries. While exposure remains relatively contained, tech startups are likely to face renewed questions and scrutiny from stakeholders, clients and prospects.
“This is not just a tech problem, as these firms lent money to all forms of startups – not just IT,” said Lovelock. “Tech CEOs must urgently ensure they are moving their organisation forward by conserving working capital, monitoring the impact on cash, securing access to credit and keeping a close eye on talent and culture. Once the organisation is properly prepared, tech CEOs can then direct and engage employees to find, accelerate and execute on market opportunities.”
Tech talent shortages continue amidst layoffs
Even as layoffs continue to impact the tech industry at large, there is still a critical shortage of skilled IT labour, Gartner’s report found. The demand for tech talent greatly outstrips the supply, which will continue until at least 2026 based on forecast IT spend.
“Tech layoffs do not mean that the IT talent shortage is over,” said Lovelock. “IT spending on internal services is slowing in all industries, and businesses are not keeping up with wage rate increases. As a result, businesses will spend more money to retain fewer staff and will turn to IT services firms to fill in the gaps.”
Gartner’s IT spending forecast methodology relies heavily on rigorous analysis of the sales by over a thousand vendors across the entire range of IT products and services. Gartner uses primary research techniques, complemented by secondary research sources, to build a comprehensive database of market size data on which to base its forecast.
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