You don’t need to be a genius to see that we are in a period of great economic uncertainty. For startups, however, a key predictor of future results is the direction of IT spending, something that we can track. When companies are spending money on tech, the reasoning goes, both established and younger companies should benefit. And if they’re not, both should suffer.
The good news is that, for the most part, signs point to an increase in IT spend in 2023, and that’s true whether you talk to CIOs, enterprise companies or analysts. It bodes well for the entire technology industry.
“The main thing we’re hearing from CIOs is that technology is part of solving the business challenges that a recession brings.” IDC analyst Rick Villars
Consider what Broadcom CEO Hock Tan said during last week’s earnings call: “We have been talking to multiple CIOs from among our largest enterprise customers we have out there. We have not seen them talk about a reduction in their IT spending,” he said. While some mentioned flat spending, few were talking about cuts, and that’s an encouraging trend heading into the new year.
That perspective fits with what IDC analyst Rick Villars is seeing. “Spending on core IT infrastructure, business software, professional services to implement and operate the systems – even if the economy stays flat, we expect to see continued healthy growth in the 5% to 6% range in aggregate for those spaces. It would take a more severe economic downturn from what we’re seeing for that to change,” Villars told TechCrunch.
That’s right where Gartner’s prediction comes in as well: an increase of 5.1% in global IT spend in 2023. That’s up from 0.8% growth in 2022, but well down from the 10.2% increase the previous year.
Where are they spending?