All signs point to IT spending increasing in 2023
It doesn't take a genius to see that we are going through a period of great economic uncertainty. For startups, however, a key predictor of future results is the direction of IT spending, something we can track. When companies spend money on technology, the reasoning is that established companies and younger ones should benefit. If they are not, both should suffer.
The good news is that, for the most part, the signs point to increased IT spending in 2023, and that's true whether you're talking to CIOs, large enterprises, or analysts. This bodes well for the entire tech industry.
"The main thing CIOs are telling us is that technology is part of solving the business challenges that a recession brings." Rick Villars, analyst at IDC
Consider what Broadcom CEO Hock Tan said on last week's earnings call: "We spoke with several CIOs among our largest enterprise customers that we have there. We haven't seen them talk about reducing their IT spending," he said. While some mentioned flat spending, few were talking about reductions, and that's an encouraging trend as we approach the new year.
This perspective matches what IDC analyst Rick Villars sees. "Spending on basic IT infrastructure, enterprise software, professional services to implement and operate systems - even if the economy remains stable, we expect healthy and continued growth in the 5% range at 6% in total for these spaces. It would take a more severe economic downturn than what we're seeing for that to change," Villars told TechCrunch.
This is also where Gartner's prediction comes in: a 5.1% increase in global IT spending in 2023. That's up from the 0.8% growth in 2022, but well in below the 10.2% increase of the previous year.
Where do they spend?
It doesn't take a genius to see that we are going through a period of great economic uncertainty. For startups, however, a key predictor of future results is the direction of IT spending, something we can track. When companies spend money on technology, the reasoning is that established companies and younger ones should benefit. If they are not, both should suffer.
The good news is that, for the most part, the signs point to increased IT spending in 2023, and that's true whether you're talking to CIOs, large enterprises, or analysts. This bodes well for the entire tech industry.
"The main thing CIOs are telling us is that technology is part of solving the business challenges that a recession brings." Rick Villars, analyst at IDC
Consider what Broadcom CEO Hock Tan said on last week's earnings call: "We spoke with several CIOs among our largest enterprise customers that we have there. We haven't seen them talk about reducing their IT spending," he said. While some mentioned flat spending, few were talking about reductions, and that's an encouraging trend as we approach the new year.
This perspective matches what IDC analyst Rick Villars sees. "Spending on basic IT infrastructure, enterprise software, professional services to implement and operate systems - even if the economy remains stable, we expect healthy and continued growth in the 5% range at 6% in total for these spaces. It would take a more severe economic downturn than what we're seeing for that to change," Villars told TechCrunch.
This is also where Gartner's prediction comes in: a 5.1% increase in global IT spending in 2023. That's up from the 0.8% growth in 2022, but well in below the 10.2% increase of the previous year.
Where do they spend?
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