Worldwide IT spending to grow 4.3% in 2023, with no significant AI impact

IT spending around the world will total $4.7 trillion in 2023, driven by a surge in software spending, according to a new forecast by Gartner.

The new spending represents 4.3% increase year-on-year and has been driven largely by software and IT services.

The report projects that worldwide IT spending could grow as much as 8.8% in 2024, to a total of $5.1 trillion.

Gartner found that at present, AI has not had a large impact on IT spending and that in the future organizations are likely to implement it using existing budgets.

For example, Google Duet AI and Microsoft Copilot are being added to product suites that are free or already factored into budgets, while other businesses will gain AI capabilities as part of contracts with their enterprise software providers.

“A great deal of software out there will get AI without a price increase, so at no cost to the end-user,” John-David Lovelock, distinguished VP analyst at Gartner told ITPro.

Lovelock argued that AI is impossible to track due to the fact that it is both a technology and an approach, with the example of chatbots and image generators as two AI tools operating in completely different markets.

“AI and generative AI is unique, in that it can use every form of technology as a channel to market,” he said.

“It'll be part of printers, it'll be part of mobile phones, it’ll be part of your software, it’ll will be part of your telecom services, your security services. Even your consulting services and outsourcing services will either use AI to deliver a better product to their end users, or they will add AI to the product feature mix for their end users.”

Lovelock also predicted that companies such as Accenture, Deloitte, PwC, and Ernst and Young will start using artificial intelligence for better product delivery, scale, and reduce costs without adding more staff.

‘Higher-level’ strategy shift

Lovelock has previously stated that IT spending is “recession-proof” and that companies that failed to increase IT spending could lose out. 

He told ITPro that this trend had continued, with some laggard companies focused on margin and cost control while others had shifted their exterior revenue-growth focus to making improvements to internal processes.

“In a sense, there is a higher-level change, where corporations coming out of 2022 into 2023 were primarily focused on revenue growth,” he told ITPro.

“Starting in maybe the end of 2022, beginning of 2023, they started to put into those digital transformation projects more work into efficiencies on the interior, on how they can make their departments more effective so that they can get to the new revenue stream?”

This drive for internal efficiencies has coincided with increased interest in infrastructure software, and Lovelock said that Gartner has seen “really strong growth” in robotic process automation (RPA).

Addressing job losses to AI, Lovelock acknowledged that it is a “tricky” issue, but maintained that it would ultimately come down to the business decisions of employers and whether they wanted to merely maintain productivity or improve it.

“For every job, there is a percentage of the time that is toil and a percentage of time that is value added. If you use AI to completely take away the toil, you wouldn’t get rid of the person because they’re adding value.

“In fact, you may start adding more people because the value that you used to get from one employee has gone up because they're no longer doing toil. So if you reduce their toil by four hours a day, now you're getting eight hours per day of value rather than four and that changes the cost equation for that role.”

The devices segment continues to decline, in line with another recent piece of research by IDC, down 8.6% in 2023 to $700 billion.

Lovelock cited mobile phones as an example, the sales of which are not expected to return to pre-pandemic levels until 2025. Gartner findings indicate that following this brief recovery, the devices will return to “close to zero percent growth” by 2027.