Finance

Tech spending might be last on the chopping block if the economy goes downhill

Execs say they’ll slash other investments before cutting tech budgets.
article cover

Baris-Ozer/Getty Images

· 3 min read

Top insights for IT pros

From cybersecurity and big data to software development and gaming. Our IT Brew newsletter delivers the latest news and analysis of trends shaping the IT industry, like only The Brew can.

Breathe a (tiny) sigh of relief. A recent Gartner survey found that many corporate execs, anticipating a recession and inevitably trying to budget-slash their way through it, see investments in technology as last on the chopping block.

The June survey of 128 CEOs and CFOs found that 41% would cut mergers and acquisitions first, followed by sustainability, workforce training and talent development, capital expenditure (capex) for physical network expansion, and product innovation. “Improvements in technology for improved efficiency and scalability” was dead last overall, with just 23% of respondents identifying it as a top area for belt-tightening. What’s more, around 45% of the execs identified the category as the last place they’d seek cuts.

That tracks with previous research by Avasant, which found that IT budgets are generally increasing despite (or even because of) economic uncertainty. Around 80% of the 225 IT organizations polled for their 2022–2023 report planned to increase their spending on IT, while just 11% reported planned cuts. The median budget increase was 5%. According to Avasant, this reflects a growing perception of IT as a strategic resource rather than a cost center, as well as a critical way to improve operational efficiency. The firm did caution that some of the budget increases could be attributed to inflation.

“Implementing digital in a way that boosts the productivity of workers, assets, and working capital will be a necessity going forward,” Gartner’s VP of research, Randeep Rathindran, told ZDNet. He added that the prioritization of cuts to sustainability was more of a surprise given how many companies claimed to make environmental concerns a top priority in 2022.

Cyber might be relatively safe, too. The industry is sometimes perceived as recession-proof, or at least as close to it as possible. According to Protocol, in June, CrowdStrike and Okta raised their fiscal year 2023 guidance by 2% and 1% respectively compared to figures in March. Factors that might contribute to that confidence include new SEC cyberattack disclosure requirements that necessitate a stronger cybersecurity posture for compliance, as well as growing awareness by corporate boards that hackers pose a major strategic risk.—TM

Do you work in IT or have information about your IT department you want to share? Email [email protected] or DM @thetomzone on Twitter. Want to go encrypted? Ask Tom for his Signal.

Top insights for IT pros

From cybersecurity and big data to software development and gaming. Our IT Brew newsletter delivers the latest news and analysis of trends shaping the IT industry, like only The Brew can.