IT spending on the rise despite ongoing layoffs, talent shortage

The digital age stops for no recession. Despite continuing economic turbulence and layoffs throughout the first quarter of 2023, Gartner's research shows that IT spending will see global growth throughout the rest of the year.

According to the release, “all regions worldwide” are predicted to increase spending to a total of $4.6 trillion, increasing 5.5% from last year. That growth is forecasted to continue into 2024, with 8.6% growth from 2023 propelled largely by the infrastructure-as-a-service market.

Gartner VP Analyst John-David Lovelock wrote that the wide-lens digital transformation underway will not be deterred by current macroeconomic storms, despite many countries “projected to have near-flat gross domestic product growth and high inflation in 2023.”

“This goes back to 2020,” Lovelock told Silverlinings. “During the pandemic, corporations had to react to public health interventions. They had to send people home, transform how they made money in many cases — how they dealt with clients. They got all that done through 2020-2021, and they started to figure out who they wanted to be post-pandemic.”

Now weathering 2023’s storms, CIOs have “a very weird balance” of digitally transforming the business and making departments more efficient, even with rising costs for most of their cloud infrastructure, he explained.

This balance is currently reflected in Gartner’s spending research through maintained technologies markets like on-prem data centers and newer spending shifts like “cloud options, as reflected in the growth in IT services.”

Among the storm’s symptoms were bank failures from the likes of Silicon Valley Bank and Signature Bank, but Gartner says this turbulence “remain[s] relatively contained.”

Still, C-suites will need to use their top-floor view vigilantly to soothe scrutiny and worries from customers and stakeholders alike. Lovelock claimed “prioritization will be critical” as this digital transformation shifts enterprise value propositions, earnings, and customer interactions.

The firm also found that the ongoing layoffs will not lighten the vital talent shortage within IT. “The demand for tech talent greatly outstrips the supply,” Gartner stated, and its IT-spend predictions suggest that will continue to 2026 at the very least. Digital transformation will reveal more enterprise spending on retaining smaller staff bases and IT service firms as they struggle to meet wage-rate increases.

“Tech layoffs do not mean that the IT talent shortage is over,” said Lovelock in the report.