Gartner cut by almost half its global IT spending growth projection for this year, as CIOs grew skittish in the inflation-stoked economic slowdown.
The analyst firm revised its forecast to 2.4% more IT spending than last year, or about $4.5 trillion. The revision came three months after Gartner predicted a 5.1% increase. The latest forecast amounts to $100 billion less in projected spending worldwide.
CIOs will be more cautious when buying, and many will delay some purchases while riding out the economic uncertainty, said John-David Lovelock, a research vice president at Gartner.
"A turbulent economy has changed the context of business decisions and can cause CIOs to become more hesitant, delay decisions or reorder priorities," Lovelock said in a statement.
The economic weakening from inflation has hit business-to-consumer companies much harder than business-to-business firms, Lovelock said. Nevertheless, B2B companies that overinvested in tech to grow their business operations will pause IT spending during the economic turmoil without cutting budgets for digital transformation projects.
"IT budgets are not driving these shifts, and IT spending remains recession-proof," Lovelock said.
John-David LovelockResearch vice president, Gartner
The PC, tablet and smartphone markets are the hardest hit, with spending forecast to fall 5.1% this year.
Consumers and businesspeople who bought new hardware to support remote work and learning at the pandemic's height do not have a reason to upgrade, Lovelock said. The rest will hold on to what they have.
Software and IT services will balance out lower device spending by growing 9.3% and 5.5% this year, respectively, Gartner said. Spending on data center systems and communications services will grow at a much smaller pace, at 0.7% and 0.1%, respectively.
What's driving IT services
Spending on IT services remains high because companies struggle to find skilled labor in countries where unemployment rates remain at record lows, Gartner said. As a result, companies are tapping IT consultants for tech support and installation.
"Skilled IT workers are migrating away from the enterprise CIO toward technology and service providers who can keep up with increased wage requirements, development opportunities and career prospects," Lovelock said.
CompTIA, a nonprofit IT workforce association, reported this month that U.S. companies hired 130,000 tech workers in December, driving the IT unemployment rate to 1.8%. The overall national rate stood at 3.5%.
Despite the labor shortage, CIOs have yet to tap alternative sources of talent, such as gig workers and interns hired through schools. In an October CIO survey, Gartner found only 12% using IT students and 23% freelancers.
Antone Gonsalves is the networking news director for TechTarget Editorial. He has deep and wide experience in tech journalism. Since the mid-1990s, he has worked for UBM's InformationWeek, TechWeb and Computer Reseller News. He has also written for Ziff Davis' PC Week, IDG's CSOonline and IBTMedia's CruxialCIO, and rounded all of that out by covering startups for Bloomberg News. He started his journalism career at United Press International, working as a reporter and editor in California, Texas, Kansas and Florida. Have a news tip? Please drop him an email.