Worldwide IT Spending Expected to Grow 2.4 Percent in 2023
Worldwide IT spending is projected to total $4.5 trillion in 2023, an increase of 2.4% from 2022, according to the latest forecast by Gartner. This is down from the previous quarter’s forecast of 5.1% growth. While inflation continues to erode consumer purchasing power and drive device spending down, overall enterprise IT spending is expected to remain strong.
“Consumers and enterprises are facing very different economic realities,” said John-David Lovelock, Distinguished VP Analyst at Gartner. “While inflation is devastating consumer markets, contributing to layoffs at B2C companies, enterprises continue to increase spending on digital business initiatives despite the world economic slowdown. A turbulent economy has changed the context of business decisions and can cause CIOs to become more hesitant, delay decisions, or reorder priorities. We’ve seen this in action with the reshuffling taking place among some B2B companies, especially those that overinvested in growth. However, IT budgets are not driving these shifts, and IT spending remains recession-proof.”
The software and IT services segments are projected to grow 9.3% and 5.5% in 2023, respectively. The devices segment is forecast to decline 5.1% this year as both consumers and enterprises lengthen device refresh cycles. “During the height of the pandemic, employees and consumers had technology refreshes of tablets, laptops, and mobile phones due to remote work and education,” said Lovelock. “Without a compelling reason for an upgrade, device assets are being used longer and the market is suffering.”
Job vacancy rates have been increasing every quarter and the open jobs per unemployed rate are at record lows in many countries. High competition for talent is challenging CIOs to hire skilled IT staff, limiting growth for companies that struggle to scale without the requisite talent. Simultaneously as software spend continues to rise, the IT services market is growing as companies look to bring in outside IT staff for implementation and support. For example, spending on consulting is expected to reach $264.9 billion in 2023, a 6.7% increase from 2022.
“CIOs are losing the competition for talent,” said Lovelock. “IT services spending is growing more quickly than internal services in every industry. Skilled IT workers are migrating away from the enterprise CIO towards technology and service providers (TSPs) who can keep up with increased wage requirements, development opportunities, and career prospects.”