IT Market Remains Resilient Despite Spending Rollbacks
ChannelE2E’s Spin: Small and midsize businesses will lean on partners – virtual CIOs – to provide digital transformation strategies. Many of those SMBs won’t even understand the need for such a strategy until they receive guidance from partners.
Performance within the IT market is patchy, according to IDC’s latest Worldwide IT Spending Growth report. Some vendors and resellers have seen sharp declines in growth while others have been buoyed by long-term enterprise commitment to cloud, digital transformation, and security investments, the report suggested.
IT services growth this year will be almost 6%, as large enterprises remain committed to long-term digital transformation investments despite short-term economic turbulence.
Overall software spending growth will be almost 11%, driven mostly by cloud software revenues which will increase by 19%. This marks a slowdown compared to last year’s cloud software growth of 25% and growth of public cloud IaaS will also slow compared to last year (from 33% in 2022, to 26% in 2023), the report said.
What this means for IT services providers will largely depend on their offering. Software and services spending continues to grow, but there has been a significant pullback in capital spending on hardware and equipment. The decline has largely been fueled by raising interest rates and recent turmoil in the banking sector adding to a general sense of economic uncertainty, according to the study’s authors.
What little growth there is in hardware spending in 2023 is increasingly concentrated in service provider and cloud-related budgets, but this growth will also be weaker than a year ago, according to IDC. Spending declines or roll-backs of note will include:
- PC spending will decline by 12% this year,
- Peripheral hardware spending will be down 3%
- Server/storage spending is forecast to increase by just 2% this year, down from 23% in 2022.
- While cloud infrastructure will continue to grow, non-cloud server/storage spending will decline by 7% this year.
“Historic Levels of Resiliency For The Tech Industry”
Stephen Minton, Vice President in IDC’s Data & Analytics research group, commented:
“Businesses are much more cost-conscious than a year ago, when inflation was adding to strong growth across much of the IT market. Efforts to consolidate and control cloud budgets, along with economic uncertainty, mean that IT vendors are having to adjust to a slower pace of growth in the new post-COVID market. Nevertheless, continued double-digit growth in overall cloud spending is driving historic levels of resiliency for the tech industry.”