Gartner’s latest forecast reveals that worldwide end-user spending on public cloud services is expected to grow 20.7 per cent to total US$591.8 billion in 2023, up from US$490.3 billion in 2022. This is higher than the 18.8 per cent growth forecast for 2022.

“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 while cloud spending is growing, organizations can only spend what they have. He said spending could even decrease if overall IT budgets shrink, since cloud is continuing to be the main portion of IT spend and proportionate budget growth. 

Infrastructure-as-a-service (IaaS) is forecast to experience the highest end-user spending growth in 2023 at 29.8 per cent. 

Additionally, Gartner expects that Cloud Application Infrastructure Services, aka Platform as a Service (PaaS) and software-as-a-service (SaaS) will see the most significant impacts from inflation.

This is due to two main factors: staffing challenges, and the focus on margin protection. However, both segments will still see continued growth, with Gartner forecasting a  23.2 per cent growth for PaaS and 16.8 per cent for SaaS next year. 

Worldwide Public Cloud Services End-User Spending Forecast (Millions of U.S. Dollars)

Source: Gartner

“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,” said Nag. “But since PaaS can facilitate more efficient and automated code generation for SaaS applications, the rate of PaaS consumption will consequently increase.”

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