New research from Gartner shows that IT spending in EMEA is set to see a 3.7%, year- over-year increase in 2023, rising to $1.3 trillion.
While companies are often hesitant to sign new contracts or commit to long-term spending initiatives during turbulent times, enterprise IT budgets are not central to this hesitancy, and as a result, businesses in EMEA (Europe, Middle East and Africa) are set to increase their IT budgets in 2023, said Gartner analyst and vice president John Lovelock.
In research released Wednesday at the company’s IT Symposium 2022 in Barcelona, Gartner found that increased spending on cloud software is largely fuelling the spending growth, with EMEA CIOs using cloud-first technologies to drive new initiatives, such as packaged business capabilities (PBCs) and data grids, while maintaining current on-premises environments.
Public cloud services spending in EMEA, meanwhile, is forecast to grow from $111 billion in 2022 to $131 billion in 2023, an increase of 18.2% year over year, Gartner said. Cloud software spending will represent 34% of total enterprise software spending in EMEA.
IT service spend is set to see the second biggest growth rate, rising by 6.6%, as CIOs continue to the lose the battle for talent and are stuck having to employ more IT managed services to plug the gaps, sometimes at great cost.
The research also found that among the most mature markets in Western Europe, UK IT spending is projected to achieve the highest growth rate in 2022, increasing by 8% in British pounds.
Consumer spending is not recession proof
While the outlook seems largely positive for enterprises, the narrative is starkly different when it came to tracking consumer IT spending.
Speaking ahead of the Gartner symposium, Lovelock noted that a country’s GDP (gross domestic product)—the value of goods and services produced during a given period—can be measured in two ways. There is “real GDP,” the inflation-adjusted GDP of a country, and “nominal GDP,” or GDP without any effect of inflation.
Lovelock said that in some European countries, nominal GDP is actually up, meaning enterprises are actually earning more money overall than last year. However, consumer purchasing power is determined by real GDP, most of which has been completely eroded by inflation, causing a shift in spending away from luxuries such as new technology and devices.
Consequently, Gartner found that in 2022, consumer spending on personal devices is projected to decline by 13%, the highest double-digit decline since 2009, when it fell by 11.3%. Furthermore, this trend is expected to carry over into 2023, with consumer spending on personal devices predicted to decline 2.6%.
“Although [personal devices] might be a need, we’ve just gone through two years of refresh,” Lovelock explained. “Refreshing our PCs for remote work, education and entertaining ourselves while we were locked in our apartments for six months at a time.”
As a result, he said the majority of consumers already own devices that are deemed “good enough,” meaning there’s no new must-have functionality on the market that would drive people to run out and replace a device early.
While spending on cloud and IT services will offset the slump in demand for personal devices, the overal EMEA IT spending growth of 3.7% next year will be a bit below the forecast for the rise in overall global IT spending, which Gartner has predicted will be an increase of 5.1% next year.