Companies worldwide made deep cuts in enterprise technology spending last year, with tighter information-technology budgets likely to stretch well into the year ahead.
Global IT spending contracted 0.2% in 2022, dropping to $4.38 trillion—a rare instance of corporations spending less on digital business tools than in the previous year, according to IT consulting and research firm
Gartner had initially estimated that IT spending had increased 0.8% last year.
The firm now expects spending to increase 2.4% this year, less than half the rate of its previous estimate in October, as economic uncertainties continue to rattle markets, Gartner said in a report Wednesday.
PCs, smartphones and other devices are seeing the biggest cuts, following a surge in spending after the Covid-19 outbreak to outfit employees for remote work, Gartner said. The devices segment of its spending forecast is projected to fall 5.1% this year, to roughly $685 billion, after dropping more than 10% in 2022.
distinguished vice president at Gartner, said barring the need for an emergency upgrade, mobile devices are being used longer to extend earlier investments.
Global smartphone shipments, including both commercial and consumer buyers, fell 17% between October and December, compared with the same period the previous year, dragging full-year shipments down 11% to a 10-year low of 1.2 billion, according to research firm Canalys.
Spending on business software and IT services is expected to remain steady year-over-year, together accounting for more than $2.16 trillion in projected spending in 2023, Gartner said. Within IT services, spending on consulting services alone is projected to reach $264 billion, up 6.7% from 2022, Gartner said.
Many corporate technology leaders said to weather tough market conditions—including high interest rates, inflation and weaker consumer and business spending—they plan to sharpen the focus of their budgets on a smaller set of priorities in the year ahead.
“We just don’t have the capacity to focus on 10 things,” said
chief information officer of
Ms. Brown said her spending priorities involve “foundational” aspects of IT, such as software that promises to unlock business value, IT modernization and hiring.
Continued spending on IT services reflects a tight labor market for tech workers, with tech departments bringing in outside IT staff to implement and support new applications. In the U.S., the unemployment rate for technology occupations in all sectors stood at 1.8% in December, roughly half of an overall national rate of 3.5%, according to IT trade group CompTIA.
At the same time, the costs associated with finding new tech workers has some employers curbing recruiting efforts. December marked the second straight month of declines in IT job postings by U.S. employers, CompTIA said.
CIO at cloud-based document management services provider
said shaky economic conditions are prompting the company to “focus our investments and efforts on areas that will provide the largest impact.”
She said her focus is on talent retention, including efforts to train existing employees while hiring workers with skills in areas that can help drive the company’s use of emerging digital tools.
“The pressure to increase digital revenue is driving urgency to start investing in areas with the best opportunity to save money, make money and do more with less,” said
chief digital information officer at software firm
“Leaders can no longer afford to experiment with one-off solutions, and instead are turning to proven platforms that drive value, fast,” Mr. Bedi said.
International Business Machines Corp.
, said an estimated 78% of global business leaders will continue investing in technology next year, according to IBM research.
“They’re investing in areas that will both protect their business and consumers, like cybersecurity, and areas they believe will drive profits, like AI and cloud computing solutions,” Ms. Guarini said.
— Isabelle Bousquette contributed to this article.
Write to Angus Loten at [email protected]
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