Gartner raises IT services forecast for 2023 ahead of TCS, Infosys earnings results this week

Worldwide IT spending is projected to touch $4.6 trillion in 2023, increasing by 5.5 percent over 2022, according to the latest forecast by Gartner, widely seen as the top IT market forecaster advising enterprise CIOs. While the devices segment is expected to contract the most among the various categories, the IT services segment is now expected to grow faster. Gartner forecasts IT services spending in 2023 to increase by 9.1 percent, compared with its January forecast of 5.5 percent. Capital markets analysts in India are hoping for “front-ended” guidance from Infosys. Notes: Worldwide IT spending is projected to total $4.6 trillion in 2023, an increase of 5.5 percent from 2022, according to the latest forecast by Gartner, widely seen as the top IT market researcher advising enterprise CIOs on their tech spending. Despite continued global economic turbulence, all regions worldwide are projected to have positive IT spending growth in 2023, Gartner said in a press release on April 6. The latest forecast is more than double the 2.4 percent estimate from January, and also higher than the 5.1 percent projection Gartner had made six months ago. The IT services segment is now expected to grow even faster. Gartner forecasts IT services spending in 2023 to increase by 9.1 percent over 2022, compared with its January forecast of 5.5 percent and its October 2022 estimate of 7.9 percent growth. This is good news for India’s IT services companies ahead of their fiscal fourth quarter and full-year results expected later this week. “Macroeconomic headwinds are not slowing digital transformation,” said John-David Lovelock, Distinguished VP Analyst at Gartner. “IT spending will remain strong, even as many countries are projected to have near-flat gross domestic product (GDP) growth and high inflation in 2023.” Prioritization will be critical as CIOs look to optimize spend while using digital technology to transform their businesses’ value proposition, revenue and client interactions, the analyst notes. The IT services segment will continue its growth trajectory through 2024, largely driven by the infrastructure-as-a-service market, which is projected to reach over 30 percent growth this year. For the first time, price is a key driver of increased spend for cloud services segments, rather than just increased usage, according to Gartner. India’s top two IT services companies are expected to report their earnings this week. Tata Consultancy Services will report its Q4 and FY23 results on April 12. Infosys will report its results on April 13. For the fourth quarter, which is the January to March 2023 period, TCS will likely lead its peers, analysts at Kotak Securities write in their latest IT preview report, dated March 31. The analysts expect TCS to report fiscal Q4 revenue growth of 1.1 percent versus the previous quarter, and an 11.2 percent increase over the same period a year earlier, in constant currency terms, which eliminates the impact of currency exchange rate fluctuations.