With the geo-political tensions rising, ascending inflation rates, and slower spending by many IT giants, a recession was well on the cards for some time now.
A major contributing factor to the current and anticipated scenarios is the hesitance of companies wanting to continue to invest in infrastructure costs. This comes after two years of piling cash and lower interest rates thanks to the pandemic when companies world over-invested in upgrading their technology infrastructure.
Compared to an estimated 20% capital spending increase in 2022, the estimated increase stands at just 6% for 2023. This sharp decline arises from anticipated revenue declines given the higher interest rates and is already leading to mass lay-offs across various sectors.
As obvious as the situation seems, it is absolutely pertinent that companies ‘continue’ to invest to ensure a ‘recession-proof’ future. According to Gartner, global IT spending could be as low as 2.4% which amounts to $4.5 trillion in 2023. Having cited these stats, the VP Analyst at Gartner, John-David Lovelock, still forecasts spending on digital transformation by firms.
t that there is expected to be a bigger polarisation between companies taking a step back from spending generously and those continuing to work on digital initiatives, thus resulting in the latter “recession-proofing” in the longer run.
Here’s why Business Transformation should not be ignored –
- Business-redefining effect – Deploying disruptive innovations and emphasizing digital transformation help redefine and re-align your business goals toward a holistic business transformation experience.
- Enhanced efficiency and productivity – Digital transformation is the keyword in today’s business ecosystem with companies indulging in upping their ante all the time and adopting better digital tools. These tools not only ensure a smoother transition through these turbulent times but also ensure better investments that would result in better revenues.
- Intellectual asset – When everyone else seems to be laying off the talent, it’s time to retain the best ones you have and better still, hire some experienced hands. After all, the best brains bring the best solutions and the best innovation and are definitely worth the investment.
- Look back and plan ahead – Lean times are often the best times to re-think strategies and come up with newer ones that help scale your processes and infrastructure. Create or revise roadmaps to fit in the current context – look at vendor negotiations, cost-effective measures, and build better client relationships.
- Companies’ Capital Spending Forecast to Slow in 2023 Amid Recession Fears – WSJ
- Gartner: Now is the time to capitalize on recession-proof IT spending | IT PRO
- Recession Advice to IT: Offensive Digital Strategy | Gartner