European ICT Spending Will Remain Resilient in 2023

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According to the Worldwide Black Book: Live Edition published by International Data Corporation (IDC), ICT spending in Europe is expected to grow by 2.8% year on year in 2023 in constant currency terms, reaching $1,184.5 billion. Despite the challenging macroeconomic climate, software and services investments will continue to grow, exceeding the growth of overall ICT spending. Cloud migrations will accelerate, as many companies will try to mitigate the adverse effects of the impending recession and its accompanying disruptions. Platforms such as AI and business intelligence will continue to receive heightened attention as they enable organizations to attain a competitive edge. During turbulent geopolitical situations, companies typically increase investments in security solutions, due to intensified cyberattacks and emerging regulations.

However, continued inflation in many countries, weakening consumer confidence, and export disruptions has created uncertainty that is adversely affecting some hardware markets, mainly PCs, tablets, and monitors. The first signs of recession in some European countries and the subsequent slowing business activity will also negatively affect the server and storage infrastructure markets, which are projected to record a year-on-year decline in 2023.

Infrastructure spending (excluding infrastructure as a service) via indirect channels is expected to decline in Europe by 1.2% year on year in 2023. By 2026, almost half of server and storage spending will continue to be generated through the channel. "Partners will continue to help vendors in maintaining robust connections with customers, in order to address the ever-evolving customer needs for holistic solutions rather than delivering infrastructure components," says Lubomir Dimitrov, research manager with IDC Data & Analytics, Europe.

The increased emphasis on digital transformation has resulted in changes in customers' expectations, driving the demand for customized multi-vendor solutions that cater to specific customer segments and industries. This resulted in increased spending flow from indirect sales through partners. Spending on software and services is expected to continue driving overall market growth. By the end of 2023, approximately 58% of software spending — i.e., applications, application development and deployment, and system infrastructure software — is forecast to go through the channel. However, the increasing number of companies transitioning to cloud will continue to make the direct channel an important source of revenue generation to vendors.