As late as October, research firms like Gartner predicted that IT spending would exponentially increase this year as firms look to bolster digital assets. Recently, however, both Gartner and Forrester predict that IT spending growth will slow during 2023 as firms grapple with the slowing economy.
As firms look to cut costs by accelerating the move to the cloud, software and cloud companies will see the most growth this year. Forrester predicts investments in these sectors could account for 34% of tech spend growth this year. The pandemic only accelerated the move to the cloud, and Gartner reports that spend on devices will decrease 5% this year as firms lengthen device refresh cycles, including on-site servers in favor of the cloud.
Despite mass layoffs throughout the tech sector, tech hiring is increasing, and with it, the competition to hire skilled staff. CIOs are competing with IT services organizations seeing growth as organizations look for support in implementing new software. Gartner predicts that IT services spending will increase by 5.5% from 3% last year.
“CIOs are losing the competition for talent,” said John-David Lovelock, Distinguished VP Analyst at Gartner. “IT services spending is growing more quickly than internal services in every industry. Skilled IT workers are migrating away from the enterprise CIO towards technology and service providers (TSPs) who can keep up with increased wage requirements, development opportunities, and career prospects.”
Forrester predicts that IT services organizations like Accenture and IBM will continue to grow this year as organizations rely on them for support of critical projects and day-to-day operations.
The Good News
An uncertain economy and continuing inflation will certainly hurt tech spend growth in 2023, but the US is still projected to spend $1.8 trillion in tech, according to Forrester. Despite the reduced growth, rising concerns, and revised forecasts, the tech industry remains strong. Technology’s increasing importance to business success ensures organizations will grow tech investments.
