IT spending forecast to grow at slower rate this year

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IT spending forecast to grow at slower rate this year

Analyst firm Gartner is forecasting in its latest quarterly report that IT spending growth will increase in New Zealand by 5.5 per cent to $17.7 billion.

This is down somewhat from the October 2022 forecast, in which Gartner estimated IT spending growth in New Zealand to increase by six per cent for 2023.

Worldwide, IT spending is now forecast to rise by just 2.4 per cent, down from the 5.1 per cent forecast in the previous quarter, Gartner said.

IT spending in New Zealand follows a similar pattern to overseas with weaknesses seen in the devices market in particular, as the purchasing boom during the pandemic recedes.

For 2023, spending growth in devices that was expected to drop by just a single percentage point in October last year is now forecast to decline by 3.4 per cent in New Zealand.

The growth in spending on data centre systems, which Gartner defines as external storage, enterprise networks and servers, is down from 23.4 per cent in 2022, to 6.16 per cent this year.

Software spending growth is down from 10.3 per cent to 10 per cent for 2022 and 2023 respectively, while more money is forecast to flow into IT services, with the growth forecast to be 10.4 per cent this year, up from 9.7 per cent the year before.

IT services and software growth are driven by organisations spending on digital projects, Gartner said.

In its latest forecast, Gartner said the labour market remains tight, with chief information offiers subject to high competition to hire skilled staff.

“CIOs are losing the competition for talent,” Gartner analyst John-David Lovelock said.

“IT services spending is growing more quickly than internal services in every industry.

"Skilled IT workers are migrating away from the enterprise CIO towards technology and service providers (TSPs) who can keep up with increased wage requirements, development opportunities and career prospects,” Lovelock said.

Enterprise IT spending overall is expected to remain strong, Gartner said.

"Inflation, skills shortages and supply chain issues continue to have a significant impact across Australia and New Zealand, driving CIOs to be more hesitant, delay decisions or reorder priorities," Lovelock said.

"Despite these economic realities, IT budgets are not driving these shifts and we continue to see local enterprises increase spending on digital business initiatives,” he added.

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© CRN New Zealand

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