Global IT spending growth slows as talent shortage bites

Worldwide spending on technology is set to hit US$4.5 trillion this year, rising by 3 per cent from 2021. 

According to a new report by Gartner, IT expenditure growth will be much slower paced than 2021 due to spending cutbacks, geopolitical uncertainty and the global talent crisis. 

Indeed, 2022’s growth rate is 7 per cent lower than 2021’s 10 per cent growth as inflation hits “top of mind” for everyone around the world. 

“Central banks around the world are focusing on fighting inflation, with overall inflation rates expected to be reduced through the end of 2023,” said John-David Lovelock, distinguished research vice president at Gartner. “However, the current levels of volatility being seen in both inflation and currency exchange rates is not expected to deter CIOs’ investment plans for 2022. 

“Organisations that do not invest in the short term will likely fall behind in the medium term and risk not being around in the long term.” 

According to the analyst firm, price increases and delivery uncertainty, exacerbated by the Russian invasion of Ukraine, have accelerated a pivot in customer buying preferences “from ownership to service”. 

This, Gartner said, pushed cloud spending to 18.4 per cent growth in 2021 and expected growth of 22.1 per cent in 2022.  

Meanwhile, spending on devices is set to shrink by 5 per cent. IT services, which accounts for US$1.2 trillion in global spending, is set to grow by 6 per cent in 2022, almost half of 2021’s growth rate.  

Growth in communications services spending has significantly shrunk from 3.8 per cent in 2021 to 0.4 per cent this year, reaching US$1.4 trillion. Software spending has also slowed down in growth from 15 per cent to 10 per cent to reach US$902 billion in 2022.  

However, cloud service demand is “reshaping the IT services industry” and is also driving spending on servers to 16.6 per cent growth in 2022 as hyperscalers build out their data centres, Gartner said. 

Competitive salaries 

Across the world, the technology skills shortage is being felt, according to Gartner, but is expected to abate by the end of 2023. 

This, the analyst claimed, is when businesses’ drive to complete digital transformations will slow down, which will have given companies time to upskill and reskill existing staff. In the short term, customers will be forced “to take action to balance increased IT demand and dwindling IT staffing levels”, Gartner said. 

Unfortunately for the company purse holders, compensation packages remain the top priority for IT talent attraction and retention. 

This is having a knock-on effect on technology service prices as business leaders attempt to balance the need for competitive salaries, thereby causing the rise in software and services spending through until 2023.  

However, for channel players this should be beneficial. According to Gartner, customers are likely to increasingly use IT service providers to plug their own lack of skilled IT staff.  

Managed service providers (MSPs) firms may be able to pick up more “lower skill set” work outsourced by customers to alleviate staff time.  

Meanwhile, “critical strategy work, which requires high-end skills unobtainable by many enterprises, will increasingly be fulfilled by external consultants,” Lovelock added.