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Research firm Gartner Inc. projects that worldwide information technology spending will climb 5.1% year-over-year, to $4.6 trillion, in 2023.

Gartner released its forecast today against the backdrop of its Gartner IT Symposium/Xpo event. According to the research firm, the jump in IT spending that is expected next year will be driven by increased investments across several areas including software, data center systems and professional services. 

“Enterprise IT spending is recession-proof as CEOs and CFOs, rather than cutting IT budgets, are increasing spending on digital business initiatives,” said Gartner research vice president John-David Lovelock. “Economic turbulence will change the context for technology investments, increasing spending in some areas and accelerating declines in others, but it is not projected to materially impact the overall level of enterprise technology spending.”

Gartner estimates that worldwide spending on software, including cloud applications, will reach $790.38 billion at the end of 2022. That represents an 8% increase from last year. Software spending is projected to grow by another 11.3% in 2023, to $879.62 billion.

Enterprise investments in data center infrastructure are set to increase as well next year, according to Gartner, but the market’s growth rate is expected to decrease. The research firm estimates that investments in data center systems will total $209.19 billion in 2022, a 10.4% improvement compared to 2021. But next year, spending in this area will grow only 3.4% compared to 2022.

The slowdown in data center spending comes as enterprises continue to broaden their use of public cloud infrastructure. Amazon Web Services Inc. increased its revenues by 39% year-over-year, to $16.1 billion, last quarter thanks to strong customer demand. The cloud giant’s operating profit jumped 38%, to $3.5 billion.

Purchases of devices such as personal computers dropped 8.4% this year in a decline that Gartner partly attributes to lower demand from consumers. The research firm projects that device spending will decrease in 2023 as well, but only by 0.6%. New device shipments are expected to account for $735.39 billion in revenue next year.

“Inflation has cut into consumer purchasing power in almost every country around the world,” Lovelock stated.  “Consumer purchasing power has been reduced to the point that many consumers are now deferring 2022 device purchases until 2023, driving spending on devices down 8.4% in 2022 and 0.6% in 2023.”

Gartner estimates that worldwide spending on communications services is set to decrease 1.7% this year, but will grow 2.4% in 2023 to reach $1.46 trillion. Meanwhile, the market for IT services such as application development and maintenance is on track to grow 4.2% this year, to $1.25 trillion. That number is set to climb to $1.35 trillion in 2023, Gartner estimates, representing a 7.9% year-over-year increase.

Photo: Unsplash

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