Gartner Forecasts Worldwide IT Spending to Grow 5.5% in 2023

IT Spending in India to Grow 0.7% in 2023 

STAMFORD, Conn., April 6, 2023 — 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, Inc. Despite continued global economic turbulence, all regions worldwide are projected to achieve IT spending growth in 2023.

“Macroeconomic headwinds are not slowing digital transformation,” said John-David Lovelock, Distinguished 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. Prioritization will be critical as CIOs look to optimize spend while using digital technology to transform the company’s value proposition, revenue and client interactions.”

The software segment will see double-digit growth this year as enterprises prioritize spending to capture competitive advantages through increased productivity, automation and other software-driven transformation initiatives. Conversely, 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 (see Table 1).

Table 1. Worldwide IT Spending Forecast (Millions of U.S. Dollars)

Source: Gartner (April 2023)

As enterprises navigate continued economic turbulence, the split of technologies being maintained versus those driving the business is apparent in their position relative to overall average IT spending growth.

“CIOs face a balancing act that is evident in the dichotomies in IT spending,” said Lovelock. “For example, there is sufficient spending within data center markets to maintain existing on-premises data centers, but new spending has shifted to cloud options, as reflected in the growth in IT services.”

The IT services segment will continue its growth trajectory through 2024, largely driven by the infrastructure-as-a-service market, which is projected to reach over 30% growth this year. For the first time, price is a key driver of increased spend for cloud services segments, rather than just increased usage.

In India, IT spending is projected to total $108.5 billion in 2023, which is slightly higher than last quarter’s update. For the remaining of the year, Indian CIOs will remain cautious, targeting their spend on IT modernization and growth initiatives. Growth initiatives, which typically involve business-led investments in applications and software-as-a-service (SaaS), will drive software spending growth in 2023.

Many Indian CIOs are embarking on cost optimization and efficiency programs which are resulting in a decline in data center systems spending. The acceleration in cloud migration, coupled with IT skills shortage, are projected to fuel IT services spending in India, which is on pace to reach 21.9 billion in 2023 (see Table 2).

Table 2. India IT Spending Forecast (Millions of U.S. Dollars)

Source: Gartner (April 2023)

Exposure from Bank Failures Remains Contained, but Tech CEOs Must Prepare for Disruption

The collapse of Silicon Valley Bank, Signature Bank and Credit Suisse created a shockwave within the banking and tech industries. 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 organization 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 organization is properly prepared, tech CEOs can then direct and engage employees to find, accelerate and execute on market opportunities.”

Tech Talent Shortages Continue Amidst Layoffs

Even as layoffs continue to impact the tech industry at large, there is still a critical shortage of skilled IT labor. The demand for tech talent greatly outstrips the supply, which will continue until at least 2026 based on forecast IT spend.

“Tech layoffs do not mean that the IT talent shortage is over,” said Lovelock. “IT spending on internal services is slowing in all industries, and enterprises are not keep up with wage rate increases. As a result, enterprises will spend more money to retain fewer staff and will turn to IT services firms to fill in the gaps.”