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Technology executives signal spending in 2023 even as the sector goes through
massive layoffs
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Technology executives signal spending in 2023 even as the sector goes through
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TECHNOLOGY EXECUTIVES SIGNAL SPENDING IN 2023 EVEN AS THE SECTOR GOES THROUGH
MASSIVE LAYOFFS

Published Thu, Dec 15 202210:35 AM EST
Ian Thomas@byIanThomas
WATCH LIVE
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Key Points
 * Almost three-quarters (74%) of tech executives say their companies will spend
   more on new technology in the next 12 months, according to a new survey of
   the CNBC Technology Executive Council.
 * That comes even as the tech industry suffers massive layoffs, and there are
   broader signals that costs will be cut heading into 2023.
 * More than a third of respondents said they expect their company’s tech
   headcount to increase as they look to take advantage of competitors’ talent
   cutbacks.

FAANG stocks displayed at the Nasdaq.
Adam Jeffery | CNBC

As the potential for a recession and a decline in consumer spending grows,
companies across sectors are signaling that they are cutting costs and either
slowing hiring or laying off workers heading into 2023.

But technology executives say they’re expecting to spend more on key initiatives
like cybersecurity and new technology in the new year as well as grow or
maintain their workforces even as a vast majority expect to see a recession soon
if one is not already here, according to the latest CNBC Technology Executive
Council survey.



Nearly three-quarters (74%) of respondents said they expect their companies to
spend more on new technology in the next 12 months, while 22% said they expect
spending to be about the same, according to the survey.

While both figures are slightly down since the last TEC survey in June when they
were 75% and 25%, respectively, it also comes after the downturn in both stock
price and business across the tech sector might suggest there would be a far
more negative outlook. Roughly 4% of respondents said they would be spending
less, compared to none in the previous survey.

Tech spending overall is forecast to rise about 5.1% next year after a gain of
less than 1% this year, according to a recent survey by Gartner, effectively
unchanged from the firm’s surveys earlier this year. Some of that may reflect a
feeling that companies that cut back on investment during previous downturns
like the 2008 financial crisis badly lagged competitors in the years that
followed.

Cloud computing, which received nearly unanimous support as “critically
important” from TEC survey respondents, will likely be the recipient of that
sustained spending. Gartner expects cloud computing revenues to rise to $101
billion next year, up from $90 billion in 2021. Cloud computing is expected to
rise by 20% for the next two to three years, according to Gartner’s forecast.

watch now
VIDEO1:3301:33
85% of tech execs say cloud computing is ‘critically important’ over next 12
months: CNBC survey
Squawk Box


The CNBC Technology Executive Council second half survey was conducted from
November 18 to December 9, with responses from 23 members of the Council, which
includes executives in roles like chief technology officer and chief information
officer across a variety of public and private organizations.



Despite the broader contractions and layoffs across the tech industry from
companies including Meta and Twitter, a majority of the survey respondents (52%)
said their companies would be keeping their tech headcount at the same level
over the next 12 months. In fact, 39% said they expected their company’s tech
workforce to increase.

That will likely come by hiring some of those workers who were laid off at other
tech companies. Fifty-six percent of respondents said that there is an
opportunity to take advantage of other companies’ hiring freezes and layoffs,
while 35% said their company is facing similar talent-related headwinds.

Economists and other observers have indicated they’re not afraid of a larger
layoff contagion emanating from the recent cuts across tech. At CNBC’s CFO
Council Summit earlier this month in Washington, D.C., KPMG chief economist
Diane Swonk waved off concerns about the recent layoffs when she said, “I’m not
worried about those [tech] workers not getting jobs pretty quickly.”

In November, the technology sector announced 52,711 job cuts, reaching a total
of 80,978 this year, according to data from executive outplacement firm
Challenger, Gray & Christmas.

While that is the most cuts across tech year-to-date since 2002 and 535% higher
than the same period last year, it is not indicative of the wider job market. So
far this year employers announced plans to cut 320,173 jobs, which while up 6%
from 2021, represents the second lowest number on record since Challenger, Gray
& Christmas started tracking job cuts in 1993. The previous low was in 2021.

It remains to be seen how a slowing economy could alter this trend.

Thirty-nine percent of respondents said the U.S. economy is already in a
recession, while another 35% said a recession will come in the first half of
2023.

watch now
VIDEO5:1105:11
Further tech layoffs likely as headcount numbers outpace revenue: Jefferies’
Brent Thill
Power Lunch


Related

 1. First half of 2023 will bring more pressure to tech stocks, says MKM
    Partners’ Rohit Kulkarni
    
 2. 2023 will be Apple’s turn-around year, says CITI’s Jim Suva
    
 3. What will happen to the tech workforce in 2023?
    
 4. Data privacy rules are sweeping across the globe, and getting stricter
    
 5. How electric air taxis could shake up the airline industry in the next
    decade
    


MORE IN TECHNOLOGY EXECUTIVE COUNCIL

Data privacy rules are sweeping across the globe, and getting stricter
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