Cloud spending to drive IT spending by 3% to $4.5tr this year

• CIOs’ investment plans are not expected to be deterred by inflation or currency volatility.
• Spending on data centre systems is forecast to experience the strongest growth of all segments at 11.1%.
• 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.
• This year’s IT spending 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 five per cent.

Worldwide IT spending is projected to increase by three per cent to $4.5 trillion in 2022 compared to $4.4 trillion a year ago, fuelled by demand for cloud services.

Not only is cloud service demand reshaping the IT services industry, but it is also driving spending on servers to 16.6 per cent growth in 2022, as hyperscalers build out their data centres.

Cloud spending to 18.4 per cent growth in 2021 and expected growth of 22.1 per cent in 2022.

While IT spending is expected to grow in 2022, research firm Gartner said that it will be at a much slower pace than in 2021 due to spending cutbacks on PCs, tablets and printers by consumers, causing spending on devices to shrink five per cent.

John-David Lovelock, Distinguished Research Vice-President at Gartner, said that inflation is top of mind for everyone and central banks around the world are focusing on fighting inflation, with overall inflation rates expected to be reduced through the end of 2023.

However, he said the current levels of volatility being seen in both inflation and currency exchange rates are not expected to deter CIOs’ investment plans for 2022.

 “Organisations 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.”

Spending on data centre systems is forecast to experience the strongest growth of all segments in 2022 at 11.1 per cent.

Digital transformation drive

Cloud consulting and implementation and cloud-managed services are expected to grow 17.2 per cent in 2022, from $217 billion in 2021 to $255 billion in 2022, helping to drive the overall IT services segment to 6.2 per cent growth in 2022.

The research firm said that 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.

Software spending is expected to grow 9.6 per cent 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.

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