Global IT expenditure will reach $4.6 trillion in 2023, representing a 5.5 percent rise from the previous year, according to Gartner.
The analyst firm revealed that despite ongoing economic uncertainty across the globe, all regions are expected to experience growth in IT spending throughout 2023.
“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.”
In 2023, the software sector is expected to experience a growth rate in the double digits, as businesses prioritise investment in software-driven transformation projects to improve productivity, automation, and gain a competitive edge. Conversely, the devices sector is expected to decline by nearly 5 percent, as consumers are likely to delay their device purchases due to a decline in purchasing power and a lack of incentive to buy.
“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.”
In the midst of ongoing economic instability, enterprises are distinguishing between the technologies that are being maintained and those that are driving business growth, which is reflected in their position in relation to the overall average growth rate of IT spending.
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.
In the Middle East and North Africa (MENA), IT spending is estimated to total $175.5 billion, up from $171.9 billion in 2022.
Tech CEOs should prepare for disruption
At the beginning of this year, the banking and tech industries were rocked by the collapse of Silicon Valley Bank, Signature Bank, and Credit Suisse.
Although the impact was relatively limited, stakeholders, clients, and prospects are likely to raise renewed questions and concerns about tech startups.
“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 layoffs result in talent shortages
Despite ongoing layoffs in the tech industry, there is still a significant shortage of skilled IT professionals. The demand for tech talent far exceeds the available supply, and this trend is expected to continue until at least 2026, as indicated by projected IT spending.
“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 enterprises are not keep up with wage rate increases. As a result, enterprises will spend more money to retain fewer staff and will turn to IT services firms to fill in the gaps.”
