IT Spending in Middle East and North Africa Will Return to Growth in 2023
IT spending in the Middle East and North Africa region is forecast to total $178.1 billion in 2023 growing 3.1% from 2022, according to Gartner.
Worldwide IT spending is projected to total $4.6 trillion in 2023, an increase of 5.1% from 2022, according to the latest forecast by Gartner. Demand for IT in 2023 is expected to be strong as enterprises push forward with digital business initiatives in response to economic turmoil.
“Enterprise IT spending will be robust as CEOs and CFOs, rather than cutting IT budgets, are increasing spending on digital business initiatives,” said Miriam Burt, Managing VP Analyst at Gartner. “Economic turbulence will change the context for technology investments, increasing spending in some areas and accelerating declines in others, but it is not projected to materially impact the overall level of enterprise technology spending.
“However, inflation has cut into consumer purchasing power in almost every country around the world. Consumer purchasing power has been reduced to the point that many consumers are now deferring 2022 device purchases until 2023, driving spending on devices down 8.4% in 2022 and 0.6% in 2023.”
The technologies that are being maintained versus those that are driving the business are evident by their projected growth rates in 2023. There is sufficient spending within data center markets to maintain existing on-premises data centers, but new spending continues to shift to cloud options, as evidenced by the 11.3% projected growth for software spending in 2023 (see Table 1).
In MENA, all segments will grow in 2023. Software segment is forecast to record the highest growth in MENA in 2023 (see table 2). MENA CIOs will follow the spending trend of their global peers by being cautious about the spending yet will not cut down on investing in tech for future resilience and to reduce business risk.
Organizations Continue to Protect Efficiency-Driven Digital Investments
In a down or deteriorating economy, conventional wisdom calls for reducing costs, including IT costs. However, a July 2022 Gartner survey of more than 200 CFOs found that 69% plan to increase their spend on digital technologies, while the 2023 Gartner CIO and Technology Executive Survey found that CIOs are being tasked with accelerating time to value on digital investments.
“Companies will use digital technology primarily to reshape their revenue stream, adding new products and services, changing the cash flow of existing products and services, as well as changing the value proposition of existing products and services,” said Burt. “This trend has fed the shift from buying technology to building, composing and assembling technology to meet specific business drivers with agility. This shift is foundational to the growth of cloud over on-premises for new IT spending.
“However, as organizations look to also realize operations efficiency, cost reductions and/or cost avoidance during the current economic uncertainty, more traditional back-office and operational needs of departments outside IT are being added to the digital transformation project list.”