Analyst IDC predicts that global spending on IT and business services will increase through the end of 2023, even as a global recession appears to be setting in. Faced with the lack of developers that companies can hire, IT services companies are a way to access these skills.
IDC expects spending in this category to grow 5.7% in 2022 and 5.2% in 2023 and projects a five-year compound annual growth rate (CAGR) of 5.2%, compared to to its previous forecast of 4.9% in April 2022.
The analyst said he remained “cautiously optimistic” for this market segment due to better-than-expected vendor results in the first two quarters of 2022 – as seen in revenue, bookings and pipelines – as well as the growth of the hybrid workplace and cloud adoption brought on by the pandemic.
“Although economic conditions in the world’s major economies have deteriorated in recent months, given the strength of service provider revenues, bookings and other leading indicators, the global services market is likely to continue its decline. current growth trajectory,” said Xiao-Fei Zhang, director of IDC’s Worldwide Services Tracker program.
Apps, engines of growth for managed services
This trend does not mean, however, that it is easy for IT services companies to retain talent: “In addition, the real threat to suppliers could come from the supply side: with bills above 1.1 or 1.15, attrition above 25%, and utilization close to 90%, something has to give in. A cooling economy can actually help providers convert employees faster. reservations in income by facilitating the labor market.”
IDC said applications remain the primary driver of managed services growth as the pandemic added billions of digital users around the world almost overnight, “draining the pool of software development talent available in the whole world”. The outlook for the workplace and infrastructure-related outsourcing market has also been adjusted moderately higher as cloud and hybrid workplace continue to fuel strong growth.
Last week, another analyst, Gartner, said business IT spending worldwide was recession-proof, even though growth in 2022 remained flat compared to 2021. Gartner predicts the strongest growth IT spending in the software sector, which includes cloud investments.
Postponements to be expected
IDC anticipates that some projects will be delayed or postponed indefinitely. While this will have a negative impact on business consulting, IDC still expects spending in this area to increase by 6-8% over the next few years.
IDC also believes that managed services will be more insulated from economic downturns because they are mission-critical services, and projects some growth for application management, workplace and infrastructure outsourcing, and support services.
“So far, the European services market has weathered the disruption exceptionally well, resulting in strong market performance in the first half of 2022,” said Milan Kalal, senior research director, IDC European. Services Group. “Demand has been fueled by the acceleration of European organizations’ digitization efforts as well as their continued appetite for cloud transition.”
Source: ZDNet.com