IT Spending To Grow 5.1 Percent In 2023, Says Gartner

There will be no cutting of IT budgets in the next year, but in fact a health growth in enterprise IT spending, an analyst house has predicted.

Gartner has indicated IT spending could potentially by recession-proof, after it forecast that worldwide IT spending will grow 5.1% in 2023.

The good news prediction stands in marked contrast to the precautions being taken by big name tech firms. Last week for example Microsoft confirmed a second round of job cuts, with under 1,000 people reportedly being handed their P45s.

Spending predictions

Gartner however predicted that IT spending worldwide will grow to a total $4.6 trillion in 2023, an increase of 5.1 percent from 2022.

Demand for IT in 2023 is expected to be strong as businesses push forward with digital business initiatives in response to economic turmoil.

“Enterprise IT spending is recession-proof as CEOs and CFOs, rather than cutting IT budgets, are increasing spending on digital business initiatives,” said John-David Lovelock, Distinguished VP Analyst at Gartner.

“Economic turbulence will change the context for technology investments, increasing spending in some areas and accelerating declines in others, but it is not projected to materially impact the overall level of enterprise technology spending,” said Lovelock.

But Lovelock warned device makers such as Apple, which recently significantly raised the prices of its iPhones and iPads outside of its home market in the US, that consumer spending has been hammered by inflationary pressures.

“However, inflation has cut into consumer purchasing power in almost every country around the world,” warned Lovelock. “Consumer purchasing power has been reduced to the point that many consumers are now deferring 2022 device purchases until 2023, driving spending on devices down 8.4 percent in 2022 and 0.6 percent in 2023.”

The technologies that are being maintained versus those that are driving the business are evident by their projected growth rates in 2023, said Gartner.

It said there is sufficient spending within data centre markets to maintain existing on-premises data centres, but new spending continues to shift to cloud options, as evidenced by the 11.3 percent projected growth for software spending in 2023.

Growth sectors

Gartner forecast that worldwide IT spending will rise 3.4 percent for data centre systems; will rise 11.3 percent for software; will decrease 0.6 percent for devices; will rise 7.9 percent for IT services; and will rise 2.4 percent for communications services.

In summary, Gartner forecast that overall IT spending will rise 5.1 percent in 2023.

The analyst house said that organisations will continue to protect efficiency-driven digital investments.

“In a down or deteriorating economy, conventional wisdom calls for reducing costs, including IT costs,” said Gartner. “However, a July 2022 Gartner survey of more than 200 CFOs found that 69 percent plan to increase their spend on digital technologies, while the 2023 Gartner CIO and Technology Executive Survey found that CIOs are being tasked with accelerating time to value on digital investments.”

“Companies will use digital technology primarily to reshape their revenue stream, adding new products and services, changing the cash flow of existing products and services, as well as changing the value proposition of existing products and services,” said Lovelock.

“This trend has fed the shift from buying technology to building, composing and assembling technology to meet specific business drivers,” said Lovelock. “This shift is foundational to the growth of cloud over on-premises for new IT spending.”

“However, as organisations look to also realise operations efficiency, cost reductions and/or cost avoidance during the current economic uncertainty, more traditional back-office and operational needs of departments outside IT are being added to the digital transformation project list,” said Lovelock.