For the fifth consecutive month, International Data Corporation (IDC) reports that it has lowered its 2023 forecast for worldwide IT spending, as technology investments continue to show the impact of a weakening economy.
Stephen Minton, vice president in IDC's Data & Analytics research group, explained:
"Since the fourth quarter of last year, we have seen clear and measurable signs of a moderate pullback in some areas of IT spending. Tech spending remains resilient compared to historical economic downturns and other types of business spending, but rising interest rates are now impacting capital spending."
In its new monthly forecast for worldwide IT spending growth, IDC projects overall growth this year in constant currency of 4.4% to $3.25 trillion.
The analyst notes that this figure is slightly down from 4.5% in the previous month's forecast, and represents a swing from a 6.0% growth forecast in October 2022.
Scaled back hardware expectations
After reductions to its PC forecasts a month ago, IDC adds that it has now scaled back its expectations for some additional hardware categories, including servers, wearable devices, and peripherals.
The analyst says forecasts have been reduced for on-premise infrastructure investments by enterprise buyers, while cloud and service provider deployments remain more resilient overall.
SP spending fades
Meanwhile, the analyst said it finds service provider spending still weakening from last year's highs, as the industry adjusts to slower post-COVID growth.
Planned investments by cloud and hyperscale providers "have broadly held up since last month," adds IDC.
The analyst concludes that strong demand for cloud services continues to drive growth despite inflationary pressures, but that non-cloud spending is set to decline.
New forecast includes channel splits
IDC's foundational Worldwide Black Book: Live Edition report from which the data is drawn is the firm's monthly analysis of the status and projected growth of the worldwide ICT industry in 86 geographies.
Benchmarking consistent, detailed market data across six continents, the analyst says its Worldwide Black Book: Live Edition offers a real-time profile of the ICT market in each of the countries where IDC is currently represented.
The analyst announced that this month's Worldwide Black Book forecast for the first time includes channel splits in the March 2023 update.
According to IDC, the channel splits show that while direct IT spending is expected to grow by 6.4% overall in 2023, indirect spending through channel providers will increase by just 2.5%, as credit tightening affects smaller businesses and consumers in their ability to fund technology investments.
IDC Data & Analytics VP Minton remarked:
"The most significant impact remains concentrated in consumer markets with consumer IT spending now forecast to decline by 2% this year. This will be a second consecutive year of declining consumer tech spending, a huge change in fortunes from consumer growth of 18% in 2021. On the other hand, enterprise demand for cloud and digital transformation remains strong despite economic headwinds."
"Resellers that still derive much of their revenue from on-premise infrastructure and PCs are facing difficult market conditions this year. Meanwhile, cloud infrastructure, software, and services are growing more slowly than a year ago but continue to account for a larger share of total IT spending and are reinforcing the general sense of resilience which the industry still enjoys."