“We have to continue to invest,” said Vijay Sankaran, chief technology officer of Johnson Controls. “You can’t do what we’re trying to do without technology.”
That theme has become a popular refrain: The economic outlook is uncertain. Contingency plans are in place. Some initiatives are being trimmed back or slowed down. But business investment in technology remains remarkably resilient, and that trend appears likely to continue in 2023.
In a recent poll of corporate technology managers in the United States by research firm IDC, 82% said they expected a recession this year. But 62% replied that technology spending at their companies would be the same or increase compared with 2022.
The managers who shape technology strategy and spending at companies nationwide hold an important swing vote in today’s economy. Their confidence could help stabilise the economy, even as consumers cut back and Silicon Valley companies trim payrolls after a period of explosive growth fuelled by the pandemic.
Technology plays a larger role in mainstream corporate operations and accounts for a larger share of business investment than in the last two recessions — in 2001 after the dot-com bubble burst and in the 2007-09 financial crisis.
The big difference is software. Business spending on software, including software developed by companies for their own use, more than doubled over the past decade, to $567 billion in 2022, according to an analysis of government data by James Bessen, an economist at the Technology & Policy Research Institute at Boston University School of Law.That is 37% more than businesses spent on factories and industrial equipment combined.
Big Tech companies such as Amazon, Alphabet, Microsoft and Meta are laying off workers. But that is not true of the broader tech economy.
Most technology workers do not work at tech companies. And while employment in tech occupations did slip slightly last month, by half a percentage point, it was 7% higher than in January 2022. Nearly 6.5 million people work in tech jobs in America, 430,000 more than a year ago, according to an analysis of government statistics by CompTIA, a technology education and research organisation.
The unemployment rate in tech occupations is 1.5%, compared with 3.4% for all workers.
