Global IT spend to grow in 2023, but experts warn it must be spent in the right areas

Worldwide IT spending is projected to total $4.6 trillion in 2023, an increase of 5.5% from 2022, according to the latest forecast by Gartner.

The research giant claims that despite continued global economic turbulence, all regions are projected to have positive IT spending growth this year.

The software segment will see double-digit growth as enterprises prioritise spending to capture competitive advantages through increased productivity, automation and other software-driven transformation initiatives.

IT services expenditure is also set to increase by almost 10%, followed by communications services (3.9%) and data centre systems (3.7%).

“Macroeconomic headwinds are not slowing digital transformation,” said John-David Lovelock, VP analyst at Gartner. “IT spending will remain strong, even as many countries are projected to have near-flat gross domestic product (GDP) growth and high inflation in 2023.”

Yet increased budgets don’t always lead to digital transformation success, according to Perry Krug, director of shared services at cloud database platform Couchbase.

“In fact, our research shows that when it comes to spend on cloud services, enterprises already overspend by $8.75 million on average,” he said.

“To prevent this sort of overspend, and to get cloud usage back on track, enterprises must gain greater visibility over their data, including where it’s stored and how it’s managed… Without visibility, enterprises can’t run in a more efficient way and ultimately won’t see the full value of their IT investment.”

Some CTOs also urge companies to make sure they are spending investment in the right areas.

Vivek Behl, digital transformation officer, global office of field CTO, WalkMe, said: “If $4.6 trillion is spent on IT that isn’t being used by employees, organisations won’t realise the benefits. They must avoid falling into the trap of believing it’s ‘job done’ once new systems have been embedded and switched on.”

According to Gartner, not all IT segments are set to widen. The devices segment will decline nearly 5% in 2023, as consumers defer device purchases due to declining purchasing power and a lack of incentive to buy.

Gartner also said the collapse of Silicon Valley Bank, Signature Bank and Credit Suisse created a shockwave within the banking and tech industries, and while exposure remains relatively contained, tech startups are likely to face renewed questions and scrutiny from stakeholders, clients and prospects.

“This is not just a tech problem, as these firms lent money to all forms of startups – not just IT,” said Lovelock.

“Tech CEOs must urgently ensure they are moving their organisation forward by conserving working capital, monitoring the impact on cash, securing access to credit and keeping a close eye on talent and culture. Once the organisation is properly prepared, tech CEOs can then direct and engage employees to find, accelerate and execute on market opportunities.”