IT Spending Rises as Employers Struggle With Workplace Transitions

Hybrid Worker

Indications are that a number of employers will transition to some form of hybrid work, where employees spend some of their days at home and others in the office. But exactly what that will mean for HR and workforce technology spending isn’t clear.

According to Gartner, IT spending will reach $4.1 trillion in 2021, an increase of 8.4% from 2020. The source of funds will more frequently come from departments outside IT, the researcher said.

Exactly how #HRTech will be spent remains uncertain as employers prepare for hybrid work. #HR Share on X

All IT spending segments will have positive growth through 2022, with the highest growth coming from devices (14%) and enterprise software (10.8%) as “organizations shift their focus to providing a more comfortable, innovative and productive environment for their workforce,” said Gartner.

Meanwhile, sales of technology that facilitates remote continues to trend higher, said the market research firm NPD Group in a story published by Reuters. For example, between March and May retail sales of USB cameras and computer microphones rose 77% and 36%, respectively, from the year-ago period.

Hardware manufacturer Logitech said it expected sales of webcams and cloud-based video collaboration equipment to remain strong throughout 2021, after tripling to $1.48 billion in the 12 months ended in March, Reuters said. And a Morgan Stanley survey showed that most companies plan to increase shared workspace as a way to reduce real estate costs.

“Executives at many corporations would like everyone back, but technology spending plans tell you they recognize the need for a flexible workspace,” Vikram Malhotra, a real estate analyst at Morgan Stanley, told Reuters.

Hot Desks Rising

Indeed, a number of employers are reconfiguring their space to accommodate workers who don’t always operate from the office. The architecture firm Vocon said some of its clients now allocate space for 40% of their employees to work at hot desks. Before the pandemic, the set-aside was for 20% of the workforce.

Even if traditional work arrangements transition to something else, the need for physical workspaces may continue to be strong. Alex Goldfarb, an analyst at Piper Sandler, told Reuters that most employers will continue to maintain them because working three- or four-day weeks will make it more difficult to consolidate space. Plus, he said, many employees will “want to be seen as though they’re part of the game.”

Increased focus on employee experience and well-being are driving technology investments in areas such as social software, collaboration platforms and HCM software, Gartner said. And while employers won’t lose their interest in optimization and cost-savings, CIOs are focused on completing efforts meant to enhance, extend or transform their company’s value proposition.

“Last year, IT spending took the form of a ‘knee jerk’ reaction to enable a remote workforce in a matter of weeks,” said John-David Lovelock, distinguished research vice president at Gartner. “As hybrid work takes hold, CIOs will focus on spending that enables innovation, not just task completion.”

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