As we head into the home stretch of 2023, it’s a great team to look back at the year so far and look forward to upcoming trends. It’s been something of a roller coaster ride for many people and companies, at least economically speaking, but signs are pointing towards more stability to come. Here are three key factors to keep an eye on as the year winds down.
As of early September, there’s both good news and bad news regarding inflation. The bad news is that inflation ticked up in August, up to 3.7% after hitting 3.2% in July. The good news, however, is that economists attribute that rise primarily to one thing: a rise in gas prices, which they expect to be temporary – and, in fact, are 3.3% lower year-over-year. That temporary rise is in large part due to oil-centered economies, such as Saudi Arabia, Russia, and their allies, extending voluntary production cuts and thus raising prices for the U.S., Europe, and beyond. Economists also point to things like easing grocery prices as a positive sign that consumers are feeling right away and will hopefully continue to ease – although the holiday season typically brings another brief spike in food and gas prices at the end of the year.
Inflation is still a global trend, influenced by global factors, and the U.S. is actually ahead of many allies (such as France, Italy, the UK, and Germany) in terms of getting inflation under control. Experts also point to “core” inflation – or inflation measured after removing highly volatile food and energy products from the calculation – nearing its targets: it fell to an annual rate of 4.3% in August (down from 4.7% in July), and it rose just slightly to 0.3% (up from the target rate, 0.2%, in July) month-to-month. Although we haven’t quite hit “back to normal,” yet, things seem to be heading in a positive direction.
Spending in IT
In the IT sector specifically, we’re looking at continued growth in 2023 and beyond. By the end of the year, Gartner projects that worldwide IT spending will reach $4.7 trillion, an increase of 4.3% over 2022. The outlook for next year appears to be even bigger: in 2024, the increase in IT spending is projected to reach as high as 8.8%.
It’s worth noting which sub-segments of the tech world are driving this increase in spending, and which are lagging. Software is seeing a massive boom, with organizations investing heavily in efficiency-oriented systems; the result is a 13.7% projected spending increase in 2023 and 14.1% increase for 2024. Devices have taken a hit in 2023, however, with a spending decrease of 8.6% that is driven, at least in some part, by inflation. For IT leaders, this can help indicate where team growth is most relevant and where fresh talent is most needed. It’s also worth noting that current spending trends seem more inclined to incorporate AI into existing spending, through “upgrades” and the like, rather than starting from scratch. That incorporation of AI, however, could add up to $4.4 billion in value by increasing productivity.
Continued Talent Growth
With growth and change in the sector comes a talent boom, too. Job postings in fields related to tech trends (i.e., applied AI, renewables, cloud and edge computing, trust architecture and digital identity) grew 15% between 2021 and 2022, even though global job postings overall decreased by 13% over the same time span. It’s one more clear indicator that IT departments and tech firms are looking to broaden their horizons and find forward-thinking talent to help navigate the fast-changing waters we’re in.
That being said, of course, searching for talent doesn’t always mean finding it. This rise in job postings also can correspond to more challenges in actually recruiting and hiring top talent, particularly in fields that may require highly specialized knowledge and/or certifications. For instance, in Gartner’s analysis, researchers focused on 15 tech “trends,” each with five specific “key skills.” Among those 75 skills, only six met or exceeded the talent “benchmark”: a two-to-one ratio of individuals with those skills to job postings requiring them. Recruiting teams will need to get even more creative in terms of employee value propositions to attract talent – and investment in upskilling to train current talent.
By Daniel Midoneck