Gartner dials back worldwide IT spending forecast

Technology /

Dive Brief:

  • Worldwide IT spending in 2023 will reach $4.5 trillion, a 2.4% year-over-year uptick, according to Gartner projections published Wednesday.
  • The analyst firm had previously forecast a 5.1% bump, to $4.6 trillion, in October. Spending on technology was roughly $4.4 trillion last year, according to Gartner.
  • Hesitant CIOs may delay some purchases in response to economic uncertainty in the coming year, but overall enterprise IT spending remains largely “recession-proof,” John-David Lovelock, distinguished VP analyst at Gartner, said.

Dive Insight:

Rather than downsizing digital transformation plans, most companies are leaning on technology to ride out the triple threat of inflation coupled with talent shortages and supply chain disruptions.

That dynamic accounts for an overall increase in global IT spending, even as consumers cut back on technology purchases and the strength of the U.S. dollar nips at technology providers’ earnings, Lovelock said.

Enterprise software and IT services will see the largest growth — 9.3% and 5.5%, respectively. Spending on IT consulting is expected to exceed $265 billion, a 6.7% year-over-year increase.

Increased services spending is a sign of ongoing tech talent shortages, fueled by high demand and low unemployment.

Skilled technologists have been snapped up by IT service providers willing to pay higher salaries in a highly competitive market. Companies strapped for talent have turned to vendors for IT support and implementation staff, according to Gartner.

When talent’s scarce, modernization stalls.

Companies face a similar issue with IT provisioning. Supply chain disruptions have lengthened delivery times for servers and networking equipment by up to a year or more, Lovelock said, leading to deployment delays that can push spending back by months as well.

Macroeconomic woes breed C-suite caution, which trickles down to CIOs, who may temporarily hold off on new purchases, the report said, even as companies maintain IT spending levels.

“Some CIOs are taking a little longer to sign contracts, but enterprises are continuing to spend on existing data centers,” Lovelock said. “They’re buying servers, networking equipment and storage, and they’re continuing to spend on licensed software, maintenance and upgrades.”

The only segment experiencing significant decline is devices, such as laptops and PCs. Consumer, employee and enterprise demand for devices spiked during the pandemic and then fell precipitously in the second half of 2022.

That trend is likely to continue through 2023, with Gartner forecasting a 5.1% decrease in device spending.

“We still have inflation, we still have young devices and we still don’t have a reason to buy new ones,” Lovelock said.

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