CIOs’ Investment Plans Are Not Expected to Be Deterred by Inflation or Currency Volatility
DUBAI, UAE: Worldwide IT spending is projected to total $4.5 trillion in 2022, an increase of 3% from 2021, according to the latest forecast by Gartner, Inc. While IT spending is expected to grow in 2022, it will be at a much slower pace than 2021 due to spending cutbacks on PCs, tablets and printers by consumers, causing spending on devices to shrink 5%. IT spend in the MENA (Middle East and North Africa) region is forecast to total $173 billion in 2022, growing 1.2% from 2021.
“Inflation is top of mind for everyone. Central banks around the world are focusing on fighting inflation, with overall inflation rates expected to be reduced through the end of 2023. However, the current levels of volatility being seen in both inflation and currency exchange rates is not expected to deter CIOs’ investment plans for 2022,” said John-David Lovelock, distinguished research vice president at Gartner. “Organizations that do not invest in the short term will likely fall behind in the medium term and risk not being around in the long term.”
Price increases and delivery uncertainty, exacerbated by the Russian invasion of Ukraine, have accelerated the transition in purchasing preference among CIOs, and enterprises in general, from ownership to service — pushing cloud spending to 18.4% growth in 2021 and expected growth of 22.1% in 2022. Not only is cloud service demand reshaping the IT services industry, but it is also driving spending on servers to 16.6% growth in 2022, as hyperscalers build out their data centers.
Spending on data center systems is forecast to experience the strongest growth of all segments in 2022 at 11.1%. Cloud consulting and implementation and cloud managed services are expected to grow 17.2% in 2022, from $217 billion in 2021 to $255 billion in 2022, helping to drive the overall IT services segment to 6.2% growth in 2022 In MENA, software will emerge as the highest growth segment in 2022, recording a 12.3% increase in spending from 2021 (see table 2). This will be followed by spending on IT services and data centers. Weak consumer outlook and supply shortages will restrict the spending on devices as it is forecast to decline 5.4% in 2022, in the region.
IT Talent Crunch is Affecting IT Spending
The critical IT skills shortage being felt across the globe is expected to abate by the end of 2023 when the corporate drive to complete digital transformations slows down and there has been time for upskilling and reskilling of existing staff. However, in the near term, CIOs will be forced to take action to balance increased IT demand and dwindling IT staffing levels.
The IT labor market continues to tighten, making it difficult to attract and retain talent. The Gartner Global Labor Market Survey of nearly 18,000 employees in the first quarter of 2022 showed compensation is the No. 1 driver for IT talent attraction and retention. Technology service providers are increasing prices on IT to allow for competitive salaries. This is driving an increase in spending in software and services through 2022 and 2023. Worldwide software spending is expected to grow 9.6% to $806.8 billion in 2022 and global spending on IT services is forecast to reach $1.3 trillion.
“Additionally, CIOs are using more IT services to assist in the lack of skilled IT staff. Tasks that require lower skill sets tend to be outsourced to managed service firms to alleviate staff time, while critical strategy work, which requires high-end skills unobtainable by many enterprises, will increasingly be fulfilled by external consultants,” said Lovelock.
More detailed analysis on the outlook for global IT spending is available in the Gartner webinar “IT Spend Forecast, 2Q22 Update: Address the Critical IT Skill Shortage.” Learn about the top priorities for CIOs in 2022 in the complimentary Gartner ebook 2022 Leadership Vision for Chief Information Officers.
Gartner’s IT spending forecast methodology relies heavily on rigorous analysis of the sales by over a thousand vendors across the entire range of IT products and services. Gartner uses primary research techniques, complemented by secondary research sources, to build a comprehensive database of market size data on which to base its forecast.
The Gartner quarterly IT spending forecast delivers a unique perspective on IT spending across the hardware, software, IT services and telecommunications segments. These reports help Gartner clients understand market opportunities and challenges. The most recent IT spending forecast research is available to Gartner clients in “Gartner Market Databook, 2Q22 Update.”
Learn more about the outlook for the IT industry during Gartner IT Symposium/Xpo 2022, the world’s most important conferences for CIOs and other IT executives. In a world that is changing faster than ever, CIOs and IT executives will learn how to meet the moment to provide the vision and results needed to lift their organizations to the next level.
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