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Channel News Joseph F. Kovar August 18, 2023, 03:44 PM EDT

In our downside scenario, theres no realistic likelihood of a contraction in IT spending. The last time we had a contraction in IT spending was back in the financial crisis in 2008 and 2009. And since then, theres been a radical transformation in the IT industry and how much tech revenue is allocated to opex versus capex based on longer term cloud and subscription based revenues, says Stephen Minton, IDCs vice president of data and analytics.

Where IT Spending Is And Isnt Growing

IT spending has proven resilient, except on the PC side, despite pressures from a variety of factors within and outside of the IT industry, according to IDC this week.

The market research firm Wednesday updated IT industry watchers on the state of IT spending, with a resilient worldwide economy despite issues related to China and the war in Ukraine leaving the door open to IT spending growth, even though it was slower than that of last year.

Stephen Minton, IDCs vice president of data and analytics, said Wednesday during a webinar on the topic that expectations of a recession in the U.S. have yet to be realized, although the possibility is still there. Meanwhile, uncertainties in other key countries including China, Germany, and the U.K. are keeping open the possibility of a slowdown in spending.

[Related: IDC, Gartner: 2022 PC Demand Dropped To Its Lowest Level In Years]

That could lead to a longer period of slower growth extending into 2024 if the U.S. does start to lean more into a recession in the next 12 months and other regions start experiencing negative spillover effects from China and the Ukraine war during the winter months, he said during IDCs State of the Market: IT Spending Mid-Year Update by Industry. The IT market next year could [then] be relatively sluggish again, growing by around 4 or 5 percent vs. our baseline forecast which is that well get back up to growth of around 8 percent in 2024.

Post-COVID pandemic PC spending remains below its peak, but other parts of the IT business including servers, storage, software, and services are seeing growth even if that growth is not as strong as it was last year, Minton said.

And while PC spending and macroeconomic and geopolitical issues remain a drag on IT spending growth, spending on newer technologies is expected to be a bright spot going forward, helping to increase the growth of overall IT spending, Minton said.

Businesses are continuing to invest in cloud and digital transformation, all those longer term projects which are tied to this strong growth in software and services, which is continuing in the first half of the year, he said. Of course, a lot of interest has grown in artificial intelligence.

There are a lot of factors that contribute to both a positive and a negative outlook on IT spending. For a look at those factors, click through our slideshow.

Joseph F. Kovar is a senior editor and reporter for the storage and the non-tech-focused channel beats for CRN. He keeps readers abreast of the latest issues related to such areas as data life-cycle, business continuity and disaster recovery, and data centers, along with related services and software, while highlighting some of the key trends that impact the IT channel overall. He can be reached at jkovar@thechannelcompany.com.

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6 Key Takeaways About IT Spending In 2023 So Far: IDC - CRN