Global IT spending forecast to rise 5.5%, fueled by software, services

Overall spending on IT products and services is expected to climb by about 5.5% this year, fueled mainly by software and services, according to a forecast from tech analyst firm Gartner Research. That level of growth would result in a total expenditure of $4.6 trillion.

In the area of data center systems, which includes servers, internal controller-based systems and networking equipment among other things, the latter is likely to prove a robust engine of growth, with Gartner predicting 8.4% year-on-year growth in constant currency. According to the forecast’s author, John-David Lovelock, the data center category as a whole should rise by 3.7% in 2023.

“[Data center vendors] are still trying to dig out from under supply chain problems,” he said. “Spending would have been even higher if manufacturers would’ve been able to build more, spend more and ship more.”

The software category is predicted to show the largest year-on-year growth figures in Gartner’s forecast, at 12.3%. That’s driven largely by analytics and business intelligence, as well as custom applications for work, Lovelock said.

“Most of the things in the analytics platform space, except for the older ones, are doing very well,” he noted.

The lone category predicted to shrink in size this year is endpoint devices, set to decline by 4.6%. The issue there, according to Lovelock, is that most of the market is highly saturated and users don’t have a particular reason to purchase new devices or upgrade existing ones at the moment.

“With inflation cutting the purchasing power of consumers, they’re holding off on replacements,” he said, noting that the spending spikes seen in 2020 and 2021 were largely the product of COVID-induced remote work demands.

The cloud market is also set to see increased spending, driven, for the first time, by increased pricing. While the cloud narrative since the technology’s widespread adoption in the 2010s has mostly been of scalability and build-outs leading to lower prices, increased labor and energy costs will finally start pushing prices higher, Lovelock said.

“There’s likely going to be some vendors raising their prices this year as they try and hold off rising costs,” he said. “For the next three years, some of the increase in spending is going to be about an increase in price, not an increase in use.”

Despite cautious overall economic forecasts, IT spending growth should continue to ramp up for the foreseeable future, according to Gartner, which predicted a further 8.6% growth in 2024.