According to a report by Gartner, Indian companies will spend a little more money (0.5% increase) on technology in 2023 compared to the year before ($110.3 billion). The report also says that worldwide spending on technology is expected to grow by 2.4% annually to reach $4.5 trillion in 2023. However, this growth rate is lower than expected (5.1%) because the sales of hardware are not recovering as quickly as expected.
Gartner had earlier estimated that Indian companies would spend $112 billion on IT by 2023. However, they have now revised this prediction due to two reasons - the effect of inflation on people's ability to buy things and the ongoing job cuts in IT companies. The new estimate is lower than the previous one.
John-David Lovelock, a respected VP Analyst at Gartner, said that the situation is different for consumers and businesses. He further explains, "Inflation is hurting consumers, leading to job losses in companies that sell to consumers, while businesses are continuing to spend more on digital initiatives despite the economic slowdown. Also, a turbulent economy can cause CIOs (Chief Information Officers) to be more careful and delay or change their decisions. This is happening in some B2B (business-to-business) companies that invested too much in growth. However, IT budgets are not the main factor causing these changes, and IT spending is not affected much by recessions."
In 2023, it is anticipated that the software and IT services industries will expand by 9.3% and 5.5%, respectively. As device refresh cycles get longer for both consumers and businesses, the gadgets segment is expected to fall 5.1% this year. Only software exhibits a positive rise in India as well, rising from 11.9% in 2022 to 12.8% in 2023. According to Gartner, spending on IT services will largely remain steady at 6.7%, a slight decrease from 6.1% in 2017.
Lovelock stated that when the pandemic was at its peak, people had to replace their old tablets, laptops, and mobile phones with new ones because of remote work and education. However, now that there is no urgent need for an upgrade, people are using their devices for a longer time, which is causing a decline in the market.
The Gartner survey also mentioned that the open jobs per unemployed rate are at record lows in several nations, and job vacancy rates have been rising every quarter. High talent competition makes it difficult for chief information officers (CIOs) to find qualified IT workers, which restricts growth for businesses that find it difficult to scale without the necessary expertise.
The IT services market is expanding at the same time as software spending do so because more businesses are looking to hire outside help for deployment and support. For instance, spending on consultancy is predicted to climb by 6.7% from 2022 to $264.9 billion in 2023.
Furthermore, Lovelock mentioned that CIOs (Chief Information Officers) are struggling to find talented IT workers. IT service spending is growing faster than internal services in all industries. Skilled IT workers are choosing to work for technology and service providers (TSPs) instead of enterprise CIOs. TSPs can offer higher wages, better career opportunities, and chances for skill development, which is why workers are choosing them over enterprise CIOs.
According to Gartner, despite inflation's ongoing effects on consumer purchasing power and device expenditure, overall enterprise IT investment is anticipated to remain healthy, supported by business digital spending. More than 95% of Indian organizations want to either grow or maintain their level of expenditure on digital transformation (DX) in 2023, according to a different study by the research firm IDC that was released in December 2022. By 2026, it is predicted that India would spend $85 billion on digital transformation, as businesses look to cut costs by improving efficiency, enhancing security and risk management, and improving customer experience.