Beating The Recession with IT Spend Increase
New research from Gartner suggests that companies may be planning to increase there IT spending to help them meet the challenges of a 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 war in Ukraine, China’s tough pandemic policies, and the US heading into recession could all contribute to a global recession in 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 focus on progressing the kind of IT initiatives that curb long-term expenditure. The thinking behind it appears to be that businesses see IT as a way to save money on other activities and provide 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 spending 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. Likewise, spending on IT services is expected to grow from $1.25 trillion this year to $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.
The Gartner report, however, predicts that there will be a slight decline in spending on end-user devices in 2023 due to 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 companies may consider increasing their spending 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 the recession.