Despite the increase, this is figure is lower than the previous quarter’s forecast of 5.1% growth and while inflation continues to have a negative affect on consumer purchasing power and device spending, enterprise IT spending is expected to remain strong.
“Consumers and enterprises are facing very different economic realities. While inflation is devastating consumer markets, contributing to layoffs at B2C companies, businesses continue to increase spending on digital business initiatives despite the world economic slowdown," said John-David Lovelock, distinguished VP analyst at Gartner.
“A turbulent economy has changed the context of business decisions and can cause CIOs to become more hesitant, delay decisions or reorder priorities. We’ve seen this in action with the reshuffling taking place among some B2B companies, especially those that overinvested in growth. However, IT budgets are not driving these shifts, and IT spending remains recession-proof.”
Additionally, the software and IT services segments are predicted to grow 9.3% and 5.5% in 2023, respectively, while the devices segment is predicted to fall 5.1% this year, as both consumers and enterprises extend device refresh cycles.
“During the height of the pandemic, employees and consumers had technology refreshes of tablets, laptops and mobile phones due to remote work and education. Without a compelling reason for an upgrade, device assets are being used longer and the market is suffering,” added Lovelock.
Strong competition for talent is creating challenges for CIOs in hiring skilled IT staff, limiting growth for companies without the needed talent.
As software spend continues to rise, the IT services market is growing as companies look to bring in outside IT staff. Spending on consulting is expected to reach $264.9 billion in 2023, a 6.7% increase from 2022.
“CIOs are losing the competition for talent. IT services spending is growing more quickly than internal services in every industry," concludes Lovelock.
"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.”
