Inflation limits consumers' purchasing power, but corporate IT spending remains strong
Worldwide IT spending is expected to total US$ 4.5 trillion in 2023, an amount that represents an increase of 2.4% compared to 2022, according to the latest research from the Gartner, a world leader in business research and advice. The new projection is below the previous quarter's growth forecast, which indicated an increase of 5.1%. although the inflation continues to erode consumer purchasing power and drive down device costs, corporate IT spending is expected to remain strong.
John-David Lovelock, Vice President and Analyst at Gartner
"Consumers and businesses are facing very different economic realities," said John-David Lovelock, vice president and analyst at Gartner. “While inflation is devastating consumer markets, contributing to layoffs at B2C companies, organizations continue to increase their spending on digital business initiatives despite the global economic slowdown. Gartner believes that a turbulent economy has changed the context of business decisions and may cause CIOs to (Chief Information Office) become more hesitant, delay decisions, or reorder priorities. We've seen this in action with reorganization taking place among some B2B companies, especially those that have invested in growth. However, IT budgets are not driving these changes and spending remains recession proof.”
The software and IT services segments are projected to grow by 9.3% and 5.5% in 2023, respectively. Gartner predicts the device segment to drop 5.1% this year as consumers and organizations extend device refresh cycles.
“During the height of the pandemic, employees and consumers made technological upgrades of tablets, notebooks and cell phones due to remote education and working,” says Lovelock. “Without a compelling reason for a new update, devices are being used longer and as a result, the market is suffering.”
Labor market affects spending on IT services — The rates of job openings have been increasing every quarter and the high competition for talent is challenging CIOs in search of more qualified IT professionals, which has been limiting the development of companies that struggle to grow without the necessary professionals.
At the same time, as spending on software continue to increase, the IT services market is also growing as organizations look to bring in external IT staff for implementation and support. Given this, advisory spending is expected to reach US$ 264.9 billion in 2023, an increase of 6.7% compared to 2022.
“CIOs are losing the competition for talent,” notes Lovelock. “IT services spending is growing faster than in-house services across all industries. Skilled IT workers are moving from corporate sector companies to technology service providers who can keep pace with rising salary requirements or looking for development opportunities and new career prospects.”
