Here’s a piece of good news for the Indian IT industry and those who seek jobs in the IT industry. Despite global headwinds and recessionary trends, the global IT spending is expected to grow 5.5 per cent to reach $4.6 trillion in 2023. Research firm Gartner Inc., said that despite continued global economic turbulence, all regions worldwide are going to witness growth in IT spending this year.

It also noted that the industry will continue to face talent shortages, saying the demand surpasses the availability of manpower. 

“Macroeconomic headwinds are not slowing digital transformation,” John-David Lovelock, Distinguished VP Analyst at Gartner, said.

“IT spending will remain strong, even as many countries are projected to have near-flat gross domestic product (GDP) growth and high inflation in 2023. Prioritisation will be critical as CIOs look to optimise spend while using digital technology to transform the company’s value proposition, revenue and client interactions,” he said.

Forecast for India

In India, IT spending is projected to total $108.5 billion in 2023, slightly higher than last quarter’s update. For the rest of the year, Indian CIOs will remain cautious, targeting their spend on IT modernisation and growth initiatives. 

“Growth initiatives, which typically involve business-led investments in applications and software-as-a-service (SaaS), will drive software spending growth in 2023,” Gartner said.

Many Indian CIOs are embarking on cost optimisation and efficiency programmes which are resulting in a decline in data centre systems spending.

“The acceleration in cloud migration, coupled with IT skills shortage, are projected to fuel IT services spending in India, which is on pace to reach 21.9 billion in 2023,” it said.

Talent shortages

Even as layoffs continue to impact the tech industry at large, there is still a critical shortage of skilled IT labor, Gartner said.

The demand for tech talent greatly outstrips the supply, which will continue until at least 2026 based on IT spending forecast.

“Tech layoffs do not mean that the IT talent shortage is over. IT spending on internal services is slowing in all industries, and enterprises are not keeping up with wage rate increases. As a result, enterprises will spend more money to retain fewer staff and will turn to IT service firms to fill in the gaps,” he said.

Double-digit growth 

Globally, the software segment will see double-digit growth this year as enterprises prioritise spending to capture competitive advantages through increased productivity, automation and other software-driven transformation initiatives.

“Conversely, the devices segment will decline nearly 5 per cent in 2023, as consumers defer device purchases due to declining purchasing power and a lack of incentive to buy,” it said.

“CIOs face a balancing act that is evident in the dichotomies in IT spending. For example, there is sufficient spending within data centre markets to maintain existing on-premises data centers, but new spending has shifted to cloud options, as reflected in the growth in IT services,” he said.

The IT services segment will continue its growth trajectory through 2024, largely driven by the infrastructure-as-a-service market, which is projected to reach over a growth of 30 per cent  this year.

Bank failures

The collapse of Silicon Valley Bank, Signature Bank and Credit Suisse created a shockwave within the banking and tech industries. While exposure remains relatively contained, tech startups are likely to face renewed questions and scrutiny from stakeholders, clients and prospects.

“This is not just a tech problem, as these firms lent money to all forms of startups—not just IT,” Lovelock said.