What Recession? IT Spending Spree to Continue Over Next 12 Months

The majority of companies in North America and Europe plan to increase IT spending over the next 12 months, despite concerns that the US may be on the verge of an economic recession.

That’s according to preliminary results(Opens in a new window) from a study by Spiceworks Ziff Davis(Opens in a new window) (SWZD), which show that fully 51% of companies plan to increase their year-on-year tech spending, while only 6% intend to tighten their IT belts.

SWZD’s data comes from its annual State of IT report, based on a survey of 1,400 IT decision makers from North American and European businesses.

Among those businesses that plan to increase spending in the coming year, the average bump is expected to be 21%.

These surprising findings come despite the fact that concerns about a possible economic downturn are nearly universal among businesses. The same research shows that 86% of companies worry that a recession may be imminent.

But while those fears have businesses scrambling to find areas where they can reduce overall spending—such as slowing hiring, reducing headcount, and re-evaluating existing contracts—SWZD’s research shows IT spending is still likely to accelerate, and not just due to inflation.

“In recent years, IT investments have proven their worth by helping businesses survive and thrive during times of great change and uncertainty,” Peter Tsai, head of technology insights at SWZD, tells PCMag. “Despite a widespread belief among IT professionals that a recession is looming, the future looks bright for the multi-trillion-dollar IT industry.”

(Credit: Spiceworks Ziff Davis)

According to Jim Rapoza, VP and Principal Analyst at Aberdeen Strategy & Research, a division of SWZD, the projected increase in year-on-year IT spending is likely to be due to a continuation of changes that began in response to the COVID-19 pandemic. 

SWZD’s 2020 State of IT study showed that roughly one-third of companies planned to channel IT spending toward enabling remote work, including beefing up security and data governance and implementing online collaboration tools. As we’ve since seen, such measures have resulted in a shift in how companies view IT spending.

“Now, more than two years later, even in the face of a recession, businesses no longer see technology as a cost they have to absorb,” Rapoza says. “Rather, IT has become a facilitator — an investment critical to success in the modern business environment.”

Rapoza predicts most businesses will focus their tech spending increases on such areas as prioritizing new IT projects, replacing outdated hardware and software, and continuing to bolster security. Another likely target is a continued effort to move IT resources from in-house to online. Last year’s SWZD State of IT results showed planned spending on new hardware had fallen 3% since 2020, while planned spending on cloud computing and managed services had risen by a similar amount.

SWZD’s full 2023 State of IT report is due to be released in September.

Editors’ Note: Spiceworks is owned by Ziff Davis, PCMag’s parent company.