What to Expect in 2023: IT Spending, Recession, Talent Crisis, Privacy

As we hurtle toward 2023, multiple opposing forces are making themselves felt in the office of the CIO and the IT organization. We are still in the midst of a talent shortage, but at the same time executives are whispering about the possibility of recession and job cuts. Outside the enterprise, consumers are feeling unstable due to economic uncertainty and inflation, but they are still spending.

What does all this mean for 2023? That was the focus of the closing session of the Forrester Technology & Innovation 2022 event in Austin and virtually in October. Here are some of the insights shared.

Global tech spending will rise, hitting $4.8 trillion in 2023, according to Forrester VP and Group Director Keith Johnston who moderated the final panel discussion at the event.

Don’t Jekyll and Hyde Your Employees

For the first time ever we will be facing a talent-constrained recession. Recessions are usually marked by high unemployment; this one will be different. Forrester recommends that IT leaders stay steady in their approach to employment numbers. Conventional wisdom may say that there needs to be a headcount reduction because we are in a recession. However, organizations that have invested in “employee experience” for the past few years stand to lose the positive reputation they have built if they whipsaw to layoffs.

“You’re switching to a Jekyll and Hyde and becoming a completely different type of persona as an employer, that's going to be a big deal and people are going to notice that and there's going to be long-term implications for that,” said David Brodeur-Johnson, principal analyst covering the future of work.

Where to Spend

As organizations face a possible recession, they are likely looking to all the items they can cut in their budgets, not just employee headcounts. Forrester predicts that 80% of companies will shift their innovation spending from creativity to resilience, according to Forrester VP and Research Director Linda Ivy-Rosser. Even as they do so, Ivy-Rosser recommends leaders “Choose pragmatism over fear.”

Meanwhile, the cost of marketing technology (martech) will increase by 20% in 2023 because there will be fewer end-to-end providers and more specialists. That means enterprises themselves will need to invest in order to integrate multiple solutions, according to Forrester VP and Research Director Mike Proulx, who leads the firm’s chief marketing officer research team.

Hybrid, Return to Office, or Remote?

There are many conflicting signals in the return-to-office movement as many organizations look to implement a hybrid schedule. Forrester is predicting that 90% of executives that try to force their hybrid workers to return to the office will “completely fail.”

What does “fail” mean in this context?

“It’s some kind of backlash. They are going to experience something that they’re going to regret from making the decision,” said Brodeur-Johnson. “We’ve got 68% of employees who can work remotely saying they want to continue to be able to do that as we move past the pandemic, but yet we have half of executives that are leading these hybrid companies saying they want to leave their options open to pull that back.”

That seems like the setup for some kind of showdown coming.

“If you force people to work in a way that is not really what they want, that’s an assault on their autonomy. From a psychological perspective, autonomy is the strongest motivator, an intrinsic motivator,” he said. “They’re going to take a hit in terms of their willingness to give you 100% of themselves and do the best work that they’re capable of for you.”

Forrester is predicting that 65% of companies will be hybrid and 15% will be fully remote.

What’s Coming in Data Privacy

Forrester is predicting that “we will do less data collection and more listening” when it comes to privacy. Among the forces acting on this trend are the possibility of new privacy laws in 2023. For instance, there are new laws that could come online in the US, and there may be enhancements to GDPR on the way. 

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