Facebook announced a potential layoff of 10% of its workforce in July. Google and Walmart are missing their earnings projections. It feels as if every large organization is banging the drum of layoffs, spending cuts, and reorganization going into the last quarter of 2022.
Companies that are worried about the economic downturn will likely cut spending; revaluating vendor contracts, slowing hiring, or prioritizing more lucrative projects. However, these cuts don’t include tech investment. In fact, most companies are planning to increase their YOY investment in IT. Tech budgets are expected to grow by more than 20% according to a survey of 1400 IT decision makers across North America & Europe.
Companies understand that their investment in technology teams and projects is the cornerstone to future success. Cutting productive technology teams and projects now doesn’t make sense, even as a recession looms. While teams may thin out less experienced or low performing workers, the market continues to favor experienced technology talent.
Gartner confirms that it expects global IT spending and investment to rise 4% over last year – a record 4.4 trillion dollars. While certain areas of technology may languish, like hardware or communications, software spending will continue to grow. According to Gartner, we are being driven by a digital transformation – fueled by enterprise application software, infrastructure software, managed services, and cloud IaaS.
And this digital transformation comes with a steep price tag that cannot be scaled through the reduction of administrative costs or renegotiated vendor contracts. The cost of falling behind on these IT investments is far more detrimental than having to hire experienced technology talent who are demanding competitive compensation packages.
Technology investment is no longer considered a cost center. Engineers make up teams that drive revenue. This shift over the last two decades has solidified tech’s ability to withstand an uneasy economy. Technology is the core of business today and there is no option to stop investment without falling behind. CISCO CEO Chuck Robbins agrees, saying, “I’m not naïve that things could slow down, and could push projects out, but not like you would have seen in the past, when [IT] was seen as a cost center.”
There is certainly concern in the uncharted waters of the post-COVID economy. However, the attention that these large tech organizations are garnering around their layoffs and missed projections ignores the fact that they are not likely to make significant cuts to their own tech spending. They know just how critical these projects are to their survival.