Gartner forecasts massive growth in software and IT services

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Analyst Gartner has projected that worldwide IT spending will total $4.6tn in 2023, an increase of 5.5% from 2022. Its latest forecast shows that despite continued global economic turbulence, all regions worldwide are set to achieve IT spending growth in 2023.

According to John-David Lovelock, distinguished vice-president and analyst at Gartner, the economic slowdown has not affected digitisation initiatives significantly: “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.

“Prioritisation will be critical as CIOs look to optimise spend while using digital technology to transform the company’s value proposition, revenue and client interactions.”

Gartner believes that as organisations 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.

Lovelock added: “There is sufficient spending within datacentre markets to maintain existing on-premise datacentres, but new spending has shifted to cloud options, as reflected in the growth in IT services.”

Its latest forecast shows that businesses will prioritise spending on software in a bid to capture competitive advantages through increased productivity, automation and other software-driven transformation initiatives.

Software spending grew 8.8% in 2022 to $794bn. By 2024, spending on software is forecast to hit $1tn. The Gartner forecast shows spending on devices will decline nearly 5% in 2023, as consumers defer device purchases due to declining purchasing power and a lack of incentive to buy.

It has also predicted an IT services growth trajectory through 2024, largely driven by the infrastructure-as-a-service (IaaS) market. which is projected to reach over 30% growth this year. Spending on IT services is expected to grow from $1.25tn in 2022 to $1.5tn by 2024. According to Gartner, for the first time, price is a key driver of increased spend for cloud services segments, rather than just increased usage.

While there have been job losses across the tech sector, Gartner warned that there is still a critical shortage of skilled IT labour. The demand for tech talent greatly outstrips the supply, which, it predicted, would 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 businesses are not keep up with wage rate increases. As a result, businesses will spend more money to retain fewer staff and will turn to IT services firms to fill in the gaps.”


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