Half of companies in Europe, North America plan to increase IT budgets next year

The data: Businesses of all sizes plan big spending on their IT departments in 2023, even with a recession in sight.

• A 2023 State of IT report from Spiceworks Ziff Davis (SWZD) found that 60% of enterprises in North America and Europe are preparing for an economic downtown, per PCMag.
• In Europe, 65% of companies are prepping for a recession, compared with 41% in North America.
• Yet, despite a potential downturn, 51% said they will increase their IT budgets YoY. Only 6% plan to reduce IT spending, and the remainder will continue at current levels.
• Cybersecurity software is expected to account for 11% of IT spending in 2023, up 10% YoY, while other software categories will remain flat.
• Deploying email server upgrades, anti-ransomware tools, hardware-based authentication, cloud-based security solutions, passwordless authentication, and bot detection services are all top areas of focus for companies over the next year.

A growth recession driver: Given the economy’s bleak outlook and the tech industry's budget cuts, a bump in IT spending may seem surprising. But it highlights a fundamental change in the global business landscape.

• Analysts at Ned Davis Research said this week that a global recession is 98% likely, per Bloomberg.
• Although this likely means more budget cuts to consumer-oriented project development, workplace entertainment, and business travel, IT spending is no longer optional.
• The digital transformation and rise of remote work over the past couple years means companies depend on robust IT departments for core aspects of their business.
• Also, some outfits migrating away from the public cloud to on-site infrastructure to deploy machine learning (ML) and other applications have made further investments in IT necessary.
• The SWZD report lends some credibility to the notion that we’re entering a “growth recession” in which companies are still spending and hiring in certain areas.

Labor challenges ahead: Companies’ plans to focus on IT, particularly cybersecurity, are bound to run up against persistent labor issues.

• According to SWZD’s data, 34% of IT professionals said they’ll look for new jobs in 2023, up from 25% in 2022.
• This coincides with a period of heightened security threats and cybersecurity workers experiencing stress and burnout.
• Although companies could resort to crowdsourcing bug hunters as a security solution, cybersecurity professionals may be wary of that option in the wake of criminal charges levied at Uber’s security chief over a 2016 breach, triggering anxiety across the sector.
• We can expect more hiring difficulties to continue due to a skills deficit until confidence grows in automation to fill in the gaps or upskilling is implemented across the board.