- Gartner has predicted end-user spending on global public cloud services to grow 20.7% with a total of $591.8bn in 2023.
- All segments in the public cloud are projected to see growth, with Infrastructure-as-a-Service (IaaS) set to experience the highest growth in 2023 at 29.8%.
- However, Gartner also warns that inflationary pressures may affect IT budgets resulting in forecast deviation as cloud expenditure takes a large proportionate from the budget.
The technological research and consulting firm Gartner forecasts strong overall growth for the worldwide public cloud market but warns that inflationary pressures may affect IT budgets resulting in the forecast deviation.
Macroeconomic conditions may affect cloud spending
According to the latest Gartner report, global end-user spending on public cloud services forecast is to increase 20.7% to a total of $591.8 billion in 2023, up from $490.3 billion in 2022. This is higher than the 18.8% growth forecast for 2022. However, it was added that current inflation and macroeconomic conditions may affect cloud spending. Organizations will only be able to spend the money on their IT budgets. So if IT budgets are reduced, the cloud spending will decrease as well since the cloud gets the largest proportionate from the organizations’ budget.
The report indicates that infrastructure-as-a-service (IaaS) is predicted as the highest end-user spending growth in 2023 at 29.8%. While Gartner expects platform as a service (PaaS) and software as a service (SaaS) to see the most significant impacts from inflation due to staffing and margin protection challenges, both segments will see continued growth. Gartner forecasted growth rates of 23.2% for PaaS and 16.8% for SaaS respectively in 2023. Sid Nag, Vice President Analyst at Gartner said;
« Higher-wage and more skilled staff are required to develop modern SaaS applications, so organizations will be challenged as hiring is reduced to control costs. But since PaaS can facilitate more efficient and automated code generation for SaaS applications, the rate of PaaS consumption will consequently increase. »
Additionally, Nag said that despite growth, profitability, and competition pressures, cloud spending should continue to rise due to never-ending cloud usage. He relies on the process that once applications and workloads move to the cloud they generally stay there. And subscription models will make sure that spending will continue through the term of the contract and most likely well beyond.