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Gartner: Public cloud spending to reach nearly $600 billion by 2023

However, it could decrease if overall IT budgets shrink due to inflationary pressures

Global end-user spending on public cloud services is predicted to reach $591.8 billion in 2023, a growth of 20.7% over last year's figures.

This is up from $490.3 billion in 2022 and higher than the 18.8% growth forecast for the year, according to market research firm Gartner.

Infrastructure as a service (IaaS) is forecast to experience the highest end-user spending growth in 2023 at 29.8% while cloud application infrastructure services (PaaS) and software as a service (SaaS) will also see continued growth. Gartner predicted growth rates of 23.2% 16.8% for PaaS and SaaS respectively in 2023. 

However, both PaaS and SaaS will see the most significant detrimental effects of rising inflation due to staffing challenges and the focus on margin protection, the analyst house said.

“Current inflationary pressures and macroeconomic conditions are having a push and pull effect on cloud spending,” said Sid Nag, vice president analyst at Gartner. “Cloud computing will continue to be a bastion of safety and innovation, supporting growth during uncertain times due to its agile, elastic and scalable nature.”

Nag added that organisations will only be able to spend the money in their IT budgets which could decrease if these are reduced. This is especially true since the cloud makes up the most of IT spend.

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“Cloud migration is not stopping,” he added. “IaaS will naturally continue to grow as businesses accelerate IT modernisation initiatives to minimise risk and optimise costs. Moving operations to the cloud also reduces capital expenditures by extending cash outlays over a subscription term, a key benefit in an environment where cash may be critical to maintain operations.”

Additionally, when hiring is limited to control costs, organisations might find it challenging to develop SaaS applications since skilled and higher-waged staff are needed, underlined the analyst. However, Nag expects the rate of PaaS consumption to increase since it can facilitate more efficient and automated code generation for SaaS applications.

“Once applications and workloads move to the cloud they generally stay there, and subscription models ensure that spending will continue through the term of the contract and most likely well beyond,” said Nag. “For these vendors, cloud spending is an annuity – the gift that keeps on giving.”

Similarly, public cloud computing was predicted to surpass traditional IT investments in 2025, Gartner revealed in February 2022. It estimated that the public cloud would account for 51% of IT spending by 2025, up from 41% in 2022. Additionally, around 65.9% of application software expenditures in 2025 will be cloud-based, compared to 57.7% in 2022.

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