State of the Market

IT Spending by Industry 2023

Jessica Goepfert
Group Vice President, Data & Analytics

Stephen Minton
Vice President, Data & Analytics
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© IDC | 2
Executive Summary
01
Economic assumptions
have firmed up a little
since November, but the
impact of interest rate
increases has yet to be
fully quantified; increased
confidence in China
recovery; we maintain our
downside scenario as an
alternative view of a
declining economy
02
IT spending held up well
through most of Q4, with
declining revenues mostly
due to currency impact;
however, some vendors
pointed to slowing sales in
the second half of
December, and scattered
reports of weakening
activity in January add to
mixed signals on IT spend
03 04
We continue to project Some economic
that enterprise and rebalancing is taking place,
service provider spending as the post-COVID
will grow more slowly than shakeout continues,
2022 but remain relatively including recovering
resilient; cloud investment and jobs in
deployments continue, AI consumer-facing and SMB
investment is strong, markets which were most
’sticky’ as-a-service impacted; but these firms
revenues will be more may also be vulnerable to
stable than capital spend rising interest rates
© IDC | 3
IT Spending vs Real GDP (YoY annual growth)
12%
11% Strong growth in post-COVID
10% recovery, also driven by inflation
9%
8%
7%
6%
5%
4%
3%
2%
1%
0%
-1% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026
-2%
-3%
Decade of stability between IT forecasts still trending
-4% financial crisis and COVID down, but resilient
-5%

IT Spending Nov GDP Nov IT Spending Jan GDP Jan

Source: IDC Worldwide Black Book (January 2023); growth in constant currency; IT Spending excludes telecom spending and business services

© IDC | 4
IT Spending Exchange Rate Impact in US$
Exchange rate forecasts
14% are volatile, but projected
12% impact on ASPs and
10% demand is accounted for
8%

6%

4%

2%

0%
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026
-2%

-4% Currency appreciation can

Negative earnings in Q4 due
-6% sometimes drive contraction in
to exchange rate impact
-8% IT spend, as reported in US$
-10%

IT Constant Currency IT Spending US$

Source: IDC Worldwide Black Book (January 2023); IT Spending excludes telecom spending and business services

© IDC | 5
 Real GDP Growth (YoY)
2021 2022 2023 2024 Overall confidence in GDP
8% forecast has firmed up,
based on latest China
7% policy moves and US data
6%
5%
4%
3%
2%
1%
0%
-1%

Source: IDC Worldwide Black Book Live Edition, February 2023 Preliminary
© IDC | 6
 IT Spending Growth (YoY constant currency)
2021 2022 2023 2024
Most regions line up
19% directionally with GDP
trends, so downside
economic scenarios are
14% still a potential headwind

9%

4%

-1%

-6%
Source: IDC Worldwide Black Book Live Edition, January 2023
© IDC | 7
 Real GDP Growth 2023 (YoY)
Apr Aug November February Slight improvement to
5% forecasts in China, US
and Europe reflecting
stronger data in
4% December and January

3%

2%

1%

0%

-1%

Source: IDC Worldwide Black Book Live Edition, February 2023 Preliminary
© IDC | 8
 IT Spending Growth 2023 (YoY constant currency)
Declining GDP forecasts in
Jul November January
November had some impact on IT
spending, but forecast is still
10% more likely to go down than up
due to softening PC demand; Q2
8% could be key for enterprise spend

6%

4%

2%

0%

-2%

-4%
Source: IDC Worldwide Black Book Live Edition, July 2022-January 2023
© IDC | 9
Update: Recession Impact on IT Spending

• PC market contracted in • Infrastructure spending • Software markets • Services markets

2022 and forecast for had a banner year in 2022, outperformed expectations performed stronger than

Infrastructure

Software
2023 is likely to be with strong investment by again in 2022, with cloud forecast in 2022, with
Devices

Services
revised down again this enterprise and service growth still at double-digit strong bookings a
month, based on provider segments pace positive leading indicator
preliminary data for revenues 2023
• Economic slowdown or • Some vendors reported
• Consumer slowdown has recession in 2023 will drive weakening orders at the • Many vendors still
spread to commercial targeted reductions; very end of Q4, but could be reporting strong pipelines
segments, low hanging already signs of a pullback due to lack of visibility despite recession worries
fruit for cost savings in some service provider
investment • Software isn’t ‘recession • Project services are
• Smartphone market is proof’, but subscription vulnerable to declines in
volatile and vulnerable • Could be the next shoe to spending will be more business confidence as
to scenarios of rising drop if economy is slowing resilient than capital interest rates begin to
unemployment more than anticipated spending bite

Demand Impacted Lower Short-Term Risk of Impact on Demand Risk of Near-Term Impact

ToC © IDC | 10
Recession Industry Impact Index
Consumer • Most impacted industries are similar to
Personal & Consumer Svs
those of the pandemic but for different
Retail
Transportation
reasons
Wholesale • Industries with higher exposure to consumer
Process Manufacturing spending, especially discretionary spend
Discrete Manufacturing
Construction
• Hardest-hit industries were still in recovery mode
Media • Moderately impacted industries less
Securities
Feb-23 dependent on consumers
Resource Industries
Banking
Aug-22 • Least impacted industries are generally
Education providing essential offerings or services and
Professional Svs
less impacted by swings in GDP
Utilities
Insurance • Situation is fluid; will continue to monitor
Healthcare Provider 10 = Most impacted and update
State/Local Government 1= Least impacted
Telecommunications • Influences technology spending trends, but
Central Government does not dictate it
0 5 10
Recession Industry Impact Index
Source: IDC Data and Analytics Organization, 2023 © IDC | 11
 IT Spending Growth by Customer and Deployment Type
2021 2022 2023 2024 2021 2022 2023 2024

24%
20%

19%
15%

14%
10%

9%
5%

4%
0%
Consumer Enterprise Service
-1%
Provider Cloud Non-Cloud
Source: IDC Worldwide Black Book Live Edition, January 2023; growth in constant currency, excludes telecom services and business services
© IDC | 12
Worldwide IT Spending Growth by Technology
2021 2022 2023 2024 Risks are still weighted to
32%
the downside, despite
28% slight improvement in
24% economic data during
December/January
20%

16%

12%

8%

4%

0%

-4%

-8%

Source: Worldwide Black Book, January 2023 (growth in constant currency)

“Total IT” includes devices, infrastructure, software and IT services; excludes telecom, business services, OT spending and emerging technologies
© IDC | 13
PC Market Slowdown Has Spread Beyond Consumer Segment
30%
$ 400,000
Worldwide PC/Tablet Spending ($m) Worldwide PC/Tablet YoY Growth (%)
25%
$ 350,000

$ 300,000 20%

$ 250,000 15%
Commercial
$ (Millions)

$ 200,000 10%

$ 150,000 5%

$ 100,000
Consumer 0%

Consumer Commercial
$ 50,000 -5%

$- -10%
2019 2020 2021 2022 2023 2024 2025 2026
2021 2022 2023 2024

Source: IDC Worldwide Black Book (January 2023); growth is constant currency
© IDC | 14
Infrastructure Spend Cooling Off Amidst Economic Anxiety
30%

Worldwide Server/Storage Spending ($m) Worldwide Server/Storage YoY Growth (%)

25%
$ 200,000

20%

$ 150,000
$ (Millions)

15%

Service Provider
$ 100,000
10%

5%
$ 50,000
Enterprise
0%

$- Enterprise Service Provider

2019 2020 2021 2022 2023 2024 2025 2026
2021 2022 2023 2024

Source: IDC Worldwide Black Book (January 2023); growth is constant currency
© IDC | 15
 All Industries Expected to Show Positive Growth
22-23 Growth

9% Securities and Investment Professional Services

Services

8% Insurance Retail

Banking
7% Media Healthcare Provider Process Manufacturing
Personal and Consumer
Services Avg: 6.1%
6%
Transportation

Construction Discrete Manufacturing

5%
Telecommunications
Utilities
Wholesale
4%
Resource Industries State/Local Government

3% Education
Federal/Central Government
2%

Share of ICT Spending

1%
0% 2% 4% 6% 8% 10% 12%

Excludes consumer industry. Source: IDC Worldwide ICT Spending Guide Enterprise and SMB by Industry, January 2023 V1
© IDC | 16
Some Industries Downgraded, But Most Are Holding Steady
2022 – 2023 Worldwide ICT Spending Growth by Industry

10%
January 2022
9% January 2023

8%

7%

6%

5%

4%

3%

2%

Source: IDC’s Data ana Analytics Organization; IDC Worldwide ICT Spending Guide Enterprise and SMB by Industry, January 2023 V1 and January 2022 V1

© IDC | 17
 Industry Impact and ICT Spending at Risk
12%
Relative Share of ICT Spending

Professional Services Discrete Manufacturing

Banking

10%

8%
Telecommunications Process Manufacturing

Federal/Central Government
6% Retail

Securities and Investment

Healthcare Provider
Services
Transportation
4% Insurance Media
State/Local Government
Education Personal and Consumer
Utilities Wholesale Services
2%

Resource Industries Construction

0%
0 1 2 3 4 5 6 7 8 9 10
Most Impacted
Excludes consumer industry. Source: IDC Data and Analytics Organization, 2023
© IDC | 18
Scenario Forecast Assumptions
Baseline
• Resilient employment data in US and Europe continues into
Q2/Q3, ensuring a soft landing as targeted by central banks,
although unemployment rises slightly
• China avoids worst-case scenarios for COVID infections, and
loosening of lockdown restrictions drives a rebound in growth
and investment from Q2
• Oil prices remain stable in the range of $75-$90 per barrel
• Ukraine war continues to impact Russia, but Europe emerges
from winter and energy prices continue to stabilize
• Interest rates having had the desired effect of moderating
inflation, central banks begin to pause increases; in some
countries, interest rates fall as inflation risks recede
• Manufacturing activity picks up as demand from China
rebounds and mature economies avoid downside scenarios
Downside Scenario
• Unemployment numbers rise in Q2 as higher interest rates begin to
have a more tangible impact on investment; consumers respond by
pulling back on spending
• SMBs which have driven much of the recent employment gains are faced
with higher financing costs, just as GDP growth is beginning to weaken
• COVID infections continue to impact China into Q2, and consumers
remain reluctant to spend; weaker demand from China has a negative
impact on everyone from manufacturers in Asia Pacific to commodity
exporters in Latin America
• Inflation continue to fall gradually, but remains at historically high levels
in many countries, creating a dilemma for central banks now grappling
with weakening growth
• Ukraine war continues, energy prices remain high as Europe heads into
another winter at the end of 2023
© IDC | 19
Worldwide IT Spending Growth by Technology, 2023 (YoY)

28%
Baseline Downside Scenario

24%
IT spending remains vulnerable
20%
to external forces, with many
16% firms preparing contingency
12%
measures for targeted
reductions and project delays
8%

4%

0%

-4%

-8%

-12%

Source: Worldwide Black Book, January 2023 (growth in constant currency)

© IDC | 20
Getting Back to Fundamentals

Assess and Plan

• Build your TAM

• Pinpoint opportunities

Prioritize and Strategize

• Choose your industry

• Understand the trends, pain points, use cases

Execute

• Accounts
• Competitors / Partners
• Share of wallet

© IDC | 21
 Healthcare Providers: Prioritized Investments to Enable Effective, 2.4 /10
Recession Industry
Impact Index
Safe and People Driven Medicine
Top Business Initiatives*
Worldwide Healthcare Provider Big Data and Analytics
Customers Public Cloud Software Opportunity
(Patients)
$12,000
Quality

People $10,000

Regulations
$8,000
0% 10% 20% 30%

$6,000
Expect Big Data to have a significant
impact* $4,000
25%
20%
15%
$2,000

10%
5% $0
0% 2021 2022 2023 2024 2025 2026
Big Data Cloud IoT Socially
On-premise/Others Public Cloud Services
services enabled
business Source: IDC Worldwide Big Data and Analytics Spending Guide, August 2022 V2
processes

*Source: 2022 Industry IT & Communications Survey (Healthcare Provider N = 280) © IDC | 22
 Central Government: Balancing Data-fueled Digital Services with 1.0 /10
Recession Industry

Safety, Security, Privacy and Compliance

Impact Index

Top Business Initiatives*

Worldwide Federal/ Central Government DX Spending by
Select Use Cases

24%

CAGR
Citizen
Experience Data-Driven
22% Defense
Public Safety
Robotics
20%

18% Intelligent
Digital
Expect Social and IoT to have a 16% Workspace
significant impact* Organizational Services
20% Agility Benefits
14%
Sustainable Administration
15%
Infrastructure
10%
12%

5%
10% Telehealth
0%
Relative size of opportunity
Socially IoT AI Cloud services 8%
enabled
0% 2% 4% 6% 8% 10% 12% 14% 16%
business
processes Source: IDC Worldwide Digital Transformation (DX) Spending
Guide, Oct 2022 (V2 2022)

*Source: 2022 IDC Industry IT & Communications Survey (Federal Government N = 246) © IDC | 23
Process Manufacturers are Collaborating Across Industry
6.75/10
Recession Industry
Impact Index
Boundaries to Drive and Scale Innovative Solutions
Top Business Initiatives*
Worldwide Process Manufacturing IoT Spending by
Performance
Select Use Cases
12%

CAGR
Root Cause
Innovation
11% Production Asset
Regulations Management
Maintenance &
11%
Cost Field Service

0% 10% 20% 30% 10% Autonomic

Operations
Food
Expect IoT to have a significant Traceability
10%
impact*
25%

20% 9%
15%

10% 9% Quality and

5% Compliance
0% Relative size of opportunity
8%
IoT Socially Big Data AI
enabled 0% 10% 20% 30% 40% 50%
business Source: IDC Worldwide IoT Spending Guide, November 2022, v2
processes

*Source: 2022 Industry IT & Communications Survey (Process Manufacturing N =417) © IDC | 24
A View From The Top: Largest Tech Vendors Winning Share in Largest
Organizations
Worldwide Top Ten Tech Spenders in Process Largest Tech Providers by Select Account
Manufacturing (Share of Wallet)
Bayer
Bayer Exxon Mobil PepsiCo
Exxon Mobil

Equinor Microsoft IBM IBM

(4.4%) (3.6%) (5.7%)
Shell
IBM Microsoft Microsoft
BP (3.6%) (3.5%) (4.2%)

Chevron Accenture Dell Dell

(3.1%) (3.3%) (3.4%)
PepsiCo
Dell Accenture Oracle
Phillips 66 (2.9%) (2.4%) (2.7%)

Marathon Petroleum
Deutsche Telekom Oracle Accenture
(2.3%) (2.1%) (2.5%)
Johnson & Johnson
$M, USD IDC estimates; Based on analysis of over 100 vendors;
0 1000 2000 3000 hardware, software and IT services
Source: IDC’s Worldwide Wallet, September 2022; IDC estimates Source: IDC’s Worldwide Wallet: Spend by Tech Provider, October 2022 V2
based on external hardware, software, and services spending

© IDC | 25
IT Market Overview
• IT spending remained broadly strong throughout 2022, despite some
mixed signals at the very end of Q4; currency had a negative impact on Q4
earnings and remains a wild card; enterprises remain determined to
continue with IT projects, but sensitive to economic risks
• Strong employment data in Dec/Jan is good news for IT spending, but
the impact of interest rate increases may become clearer in Q2
• Confidence in China recovery has firmed up, and is crucial to stability in
global economy and IT market this year, but downside risks still linger
• PC forecast is likely to fall again later this month; server/storage
forecasts were reduced in December, including for service provider spend;
IT services forecasts were reduced but continue to display resilience;
software earnings are still strong, but a few mixed signals in December
• Consumer spending has deteriorated rapidly, and consumer-facing
industries are vulnerable to downside economic risks if interest rates
begin to drag on investment and growth in Q2/Q3
• Cloud deployments continue to drive growth, while investments in AI,
Big Data and IoT remain highly prioritized across key industries

© IDC | 26
ICT Spending Forecast Updates

Jan/Feb Feb-July July

Current forecast Monthly ICT Spending Guide
in ICT Spending forecast updates updates industry
Guide/Black Book in Black Book forecasts

• Current forecasts reflect latest economic/market data through to January

• Monthly forecast updates in Worldwide Black Book will show ongoing
impact of economic indicators, market performance and other inputs over
the next 6 months
• Industry and Company Size Spending Guide updated again in mid-year,
will reflect all changes to IT spending forecasts and assumptions
• Monthly Black Book also includes splits for customer type (consumer vs
enterprise vs service provider), deployment (cloud vs non-cloud) and
from March 2023, channel (direct vs indirect)
• Downside scenario is still in play and updated monthly

© IDC | 27
For Additional Information

Jessica Goepfert
jgoepfert@idc.com

Stephen Minton
sminton@idc.com

IDC.com linkedin.com/company/idc twitter.com/idc blogs.idc.com

© IDC