Worldwide IT spending will grow 5.1% in 2023, says Gartner

The spending on information technology (IT) is projected to increase 5.1% year-over-year (YoY) globally in 2023 to $4.6 trillion, according to research firm Gartner. The rise in IT spending next year is expected to be driven by increased investments across several areas, including software, data centre systems and professional services, it added.

Gartner, which released its forecast at the Gartner IT Symposium/Xpo event, taking place in Orlando, US, estimates that worldwide spending on software, including cloud applications, will reach $790.38 billion at the end of 2022. This growth represents an 8% increase from last year. Software spending is projected to grow by 11.3% in 2023, to $879.62 billion.

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

“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,” he added.

As per the survey, enterprise investments in data centre infrastructure are set to increase next year as well, but the market’s growth rate is expected to fall. The research firm estimates that investments in data centre systems will total $209.19 billion in 2022, a 10.4% improvement compared to 2021. But next year, spending in this area will grow only 3.4% from 2022.

“Inflation has cut into consumer purchasing power in almost every country around the world,” Lovelock said. “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% in 2022 and 0.6% in 2023.”

Gartner estimated that worldwide spending on communications services is set to decrease 1.7% this year, but will grow 2.4% in 2023 to reach $1.46 trillion. Meanwhile, the market for IT services such as application development and maintenance is on track to grow 4.2% this year, to $1.25 trillion. That number is set to climb to $1.35 trillion in 2023, Gartner said, representing a 7.9% year-over-year increase.

Following the trend, an October 13 data released by International Data Corp. (IDC) noted that Indian IT spending will grow by 13.8% in 2022, keeping IT spending in India resilient. However, it is down from 25.3% in 2021. The analyst firm noted that contraction in IT spending is due to reduced consumer technology spending. Enterprise technology spending is stable as enterprises continue to protect their budgets and are managing by reallocating resources to needed items, it said. 

“Based on the current forecast of a mild global recession, we expect IT spending of Indian enterprises to demonstrate resilience in the short term,” says Vinay Gupta, Research Director, IT Spending Guides, IDC Asia/Pacific. “Indian enterprises continue to focus on their digital innovation initiatives, business operations resiliency, and customer experience programs. However, enterprises are keeping a sharp eye on global events,” he added.

Lovelock too observed that while 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, leading to a shift, from say, “the growth of cloud over on-premises for new IT spending”, he cautioned that “organisations should also realise operations efficiency, cost reductions and/or cost avoidance during the current economic uncertainty”.