New research from Gartner suggests that companies may be planning to increase their IT spend to help them meet the challenges of a recession.
The Recession
Following the worst bout of inflation for 40 years and a shrinking economy, in September the Bank of England raised interest rates as it reported that the UK is already in recession. Many financial commentators are now predicting that factors such as the effects of the war in Ukraine, China’s tough pandemic policies, and the US heading into recession could all be contributing to a global recession into 2023.
Investing In IT To Save Money On Other Activities
Gartner’s report highlights how businesses are projected to increase IT spending by 5.1 per cent next year to try and beat the worst effects of the recession.
According to the report, the extra IT spending will be focused on progressing the kind of IT initiatives that can curb long-term spending. The thinking behind it appears to be that businesses see IT as a way to save money on other activities, and as a way of providing ways to make them operate more efficiently. Using IT, companies could improve their internal operations in a way that could enable them to scale without adding extra staff, thereby helping them to combat some of the effects of a recession.
Software And Services
The Gartner report indicates that most of the increased IT spend will be on software and services. Software spending (worldwide) is predicted to rise from $790 billion this year to $879 billion in 2023 – a growth rate of 11.3 per cent. Spending on IT services is predicted to rise from $1.25 trillion this year $1.35 trillion next year – a growth rate of 7.9 per cent. Spending on data centre and other on-premises services also look likely to increase.
Not Devices
The Gartner report, however, predicts that there will be a small decline in spending on end-user devices in 2023 due the effects of inflation on consumer purchasing.
What Does This Mean For Your Business?
High energy costs and the pressures of recession look set to challenge businesses in the year(s) ahead to find ways to operate more efficiently. The Gartner report indicates that many businesses may consider that increasing their spend on IT services and software that could improve their internal operations in a way that could deliver cost-savings, curb long-term spending, and enable them to scale without increasing headcount. Smart IT spending in 2023 could, therefore, be a way for businesses to protect themselves from some of the effects of recession.
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