Here's where your tech spending is going to rise and fall in the next year
Tech analyst Gartner predicts worldwide IT spending will grow 5.1% on an annual basis in 2023 despite the world's slowing economy and almost no growth in spending in 2022.
While PC and smartphone shipments have fallen significantly this year due to deferred consumer spending, Gartner analysts reckon enterprise IT spending is "recession-proof" even though worldwide enterprise IT spending growth in 2022 was flat compared to 2021 – the year many businesses kicked off digital transformation plans in response to the coronavirus pandemic.
Gartner is forecasting 2022 worldwide enterprise IT spending will reach $4.42 billion, up just 0.8% on 2021, a year in which spending jumped 10.2% on the prior year. But for 2023, Gartner is predicting enterprise IT spending will grow 5.1% to $4.66 billion.
"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."
Not all parts of the tech world are doing so well. Analyst IDC reported Q3 2022 PC shipments declined 15% year on year as consumers and businesses tightened belts. Apple was the only major PC vendor to see shipments rise. Canalys said desktop and notebook shipments fell 18% in Q3 2022, noting that commercial demand, which held up for most of the year, was now waning as IT budgets are reprioritized or slashed.
Gartner's upbeat outlook is based on a survey of over 200 chief financial offices in July, which found that 69% planned to raise spending on digital technologies to transform revenue streams.
The analyst also believes businesses have shifted from buying technology to "building, composing and assembling" tech for business needs, which it believes underpins the growth in cloud spending over investments in on-premises IT.
Gartner's software category includes cloud spending, which it forecasts will rise 11.3% in 2023 to reach $880 million. Spending on data center systems is expected to grow only 3.4% to $216 million, while spending on devices will decline 0.6% to $735 million. IT services will grow 7.9% to $1.38 billion, while spending on communications services will grow 2.5% to $1.47 billion.
"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.
"However, as organizations look to also realize 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."