IT spending to grow as businesses use tech to battle expected recession

IT spending to grow as businesses use tech to battle expected recession

Gartner says software and services will drive growth, while data centre spending will also increase, though more modestly.

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Worldwide spending on IT products and services will continue to grow next year, even as some economists predict a recession in 2023, according to a report released today by Gartner Research.

A steady 5.1 per cent increase — to a projected total of US$4.6 trillion — represents businesses trying to get ahead of the worst effects of the recession by pushing ahead IT initiatives designed to curb long-term spending, the report said.

The lion’s share of that growth, according to Gartner, will be taken up by software and services spending. Total worldwide software spending is set to grow from about $790 billion this year to $879 billion in 2023, representing an 11.3 per cent growth rate. Likewise, spending on IT services will increase from $1.25 trillion in 2022 to $1.35 trillion next year, for a 7.9 per cent rate of growth.

The only decline will be seen in spending on end-user devices, which Gartner projects will decrease from $739 billion this year to $735 billion in 2023. That’s a product of inflation undermining consumer purchasing power, though it’s a much smaller decline than that seen between 2021 and 2022.

Data centre spending, meanwhile, is pegged to increase by a modest 3.4 per cent next year, rising from $209 billion this year to $216 in 2023.

According to the report’s author, Gartner distinguished vice president analyst John-David Lovelock, data centre and other on-premises spending will happen more or less across the board, with no specific types of equipment likely to be a higher priority.

“So when we look at the numbers, servers are up; storage, licences and maintenance on software, even consulting services to maintain data centres in place,” he said. “That’s all sufficient to maintain the numbers that are being done on-prem.”

Spending is likely to grow even in the teeth of a recession, according to the report, because organisations increasingly see IT as a way to save money on other activities, rather than as a cost centre. Line-of-business efficiencies designed to make companies operate more efficiently are increasingly sought after as organisations prepare to tighten their belts, and IT improvements can help make them happen.

“If my company does really well and I grow from 5,000 employees to 10,000 employees, my payroll department is likely to grow — but maybe it doesn’t have to,” said Lovelock. “The biggest change in the next six months is the reintroduction and reprioritisation of tech to aid internal operations, and bolstering spending on IT to help [businesses] scale without adding headcount.”

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