Throughout most industries, CEOs are focused on their digital transformation initiatives. While the economic outlook for this year includes many uncertainties, one thing remains certain -- the role of technology as the enabler for digital business growth.
With that reality in mind, worldwide Information Technology (IT) spending will total $4.6 trillion in 2023, an increase of 5.5 percent from 2022, according to the latest market study by Gartner.
Despite continued global economic turbulence, all regions worldwide are projected to have positive IT spending growth in 2023. Business technology investment is somewhat resilient to market conditions.
Business Technology Market Development
"Macroeconomic headwinds are not slowing digital transformation," said John-David Lovelock, vice president 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 Chief Information Officers (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 IT devices segment will decline nearly 5 percent in 2023, as more people choose to defer planned device procurement due to declining purchasing power and a lack of incentive to buy.
Meanwhile, the collapse of several banks created a shockwave within the Global Networked Economy. While exposure remains relatively contained, technology startups are likely to face renewed scrutiny.
Moreover, venture capital and private equity firms have reassessed their options. "This is not just a tech problem, as these firms lent money to all forms of startups – not just IT," said Lovelock.
According to the Gartner assessment, tech CEOs must 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.
Gartner analysts believe that once the organization is properly prepared, tech CEOs can then direct and engage employees to find, accelerate and execute their potential market growth opportunities.
Furthermore, research shows there is still a critical shortage of skilled and experienced IT talent. The demand for proven digital business talent greatly outstrips the supply, which Gartner says will continue until at least 2026.
"Tech layoffs do not mean that the IT talent shortage is over," said Lovelock.
Outlook for Business Technology Investment Growth
IT spending on internal services is slowing in all industries, and enterprises are not keeping up with wage rate increases. As a result, Gartner predicts enterprises will spend more money to retain fewer staff and will turn to IT services firms to fill in the skill gaps.
That said, I believe many senior executives are driven to invest more in business technology to retain their leadership position in highly competitive industries and markets. Why? Forward-looking CEOs know that maintaining their digital business growth aspirations is not an optional endeavor.
Likewise, those executives recognize that flexible working options must be offered in order to attract and retain the most qualified and experienced digital talent. Plus, a successful quest for the most skilled practitioners is global, by default, and not limited to local candidates. Borderless recruiting from the best Anywhere Workforce is a must.