Saturday, May 27, 2023

Investment in technology will grow 4.2% in Europe this 2023, despite the recession and the war in Ukraine

Spending on information and communication technologies (ICT) in Europe will reach 1.2 trillion cents in 2023 (1.2 trillion in Anglo-Saxon nomenclature), according to the IDC report. Furthermore, this figure is expected to exceed $1.4 trillion by 2026, with a compound annual growth rate of 5.4% through 2026.

Despite the economic uncertainty in several European countries, overall ICT spending in Europe will grow by 4.2% in 2023, led by the Scandinavian countries and the UK. On the other hand, and as expected, the sanctions imposed by the EU and the growing number of companies leaving Russia will cause the Russian market to decrease by 9.4% year on year.

This is why, although many companies expect a recession this year, spending on digitization solutions in Europe remains positive, as institutions see investments in technology as a way to gain competitive advantage and tools to overcome the challenges that arise in the most volatile market.

Software and the cloud are pulling the bandwagon

The IDC report breaks down the biggest trade routes in the Old Continent by business segment. And, among them, the usual software stands out, as well as investments in cloud-based solutions, which will give a boost to the technological market in Europe in 2023.

From the firm’s analysis, they warn that software is highly resistant to the disruptions that are currently affecting the continent, due to the rapid growth in the adoption of artificial intelligence platforms and tools for monitoring software quality and its running life, as well as application platforms, integration and orchestration of middleware, and collaborative applications.

[El sector público redoblará su inversión en digitalización para modernizar sus infraestructuras más obsoletas]

Despite the inflationary and economic pressures in several European countries, the most common theme, investments in IT and business services, are also expected to grow in telecommunication services and hardware. However, and as we have seen in recent decades, the machine market will be in the red, with a 2.2% drop in spending in this field in 2023.

From IDC they attribute this bad behavior not so much to manufacturing factors, but to decreasing purchasing power, restrictions in the supply chain and cost reduction measures in companies.

In fact, the consumer market will remain the largest source of ICT spending in 2025, accounting for nearly 28% of Europe’s total ICT revenue. However, annual growth is expected to remain below 1%, leaving little room for growth or growth for players operating exclusively in this activity segment.

On the other hand, the banking and discrete industries, which occupy second and third place, in terms of total industry, have a long investment path ahead, representing a combined market of more than 210,000 million dollars. according to the IDC.

More positive figures than the rest of the world

The figures confirmed by this consultancy are better than those that its big rival Gartner announced a few weeks ago on a global scale. According to this, this year the global expenditure on ICT is expected to grow by 2.4% compared to 2022, to 4.5 trillion dollars (4.5 trillion Anglo-Saxon). A positive figure if you compare it with the 0.2% experienced last year but far from the 5.1% growth estimated by analysts a few months ago.

“A turbulent economy has changed the context of business decisions and may cause CIOs to become more hesitant, delay decisions or rearrange priorities.” However, IT systems are not experiencing these changes and remain recession-proof,” said John-David Lovelock, an analyst at Gartner at the time.

According to this source, the software and IT services segments are expected to grow by 9.3% and 5.5% this year, respectively. Further consulting spending is expected to reach $264.9 billion in 2023, an increase of 6.7% over 2022.

World Nation News Desk
World Nation News Desk
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