Outside of Silicon Valley, tech spending is resilient
Big bank JPMorgan has 55,000 tech employees, up from about 50,000 before the pandemic. Lori Beer, the bank’s global chief information officer, said it had hired people with skills in cloud computing, data science, artificial intelligence and cybersecurity, and the bank would continue to add staff selectively.
A global technology survey points to softness in hardware spending. Sales of PCs and smartphones, used for remote work and for consumers, have fallen sharply after a surge in the pandemic. Two major technology research firms, Gartner and IDC, have lowered their growth forecasts in recent months, citing continued PC slump, economic turmoil and a stronger dollar.
But business investment, especially in software, remains fairly strong. Gartner chief forecaster John-David Lovelock said spending was growing in every industry he tracks and Call this trend “recession proof.” Business investments in technology are not immune to recessions, but are “more resilient than ever,” said his IDC counterpart, Stephen Minton.
Sales of remote cloud computing and software may be slowing, but only from the height of the pandemic’s stratosphere. Amazon reports this month Its high-margin cloud business, industry leader Amazon Web Services, has more than $80 billion in annual revenue and grew 20% in the fourth quarter. Microsoft, the second largest cloud computing company, According to reports, sales of AzureIts flagship cloud product, rose 31%.
Recent results for enterprise technology vendors show a similar pattern.Vendors focused on helping companies transform to digital operations and cloud computing performed well, including Accenture, Oracle and service now. IBM announces job cuts, but business units are cutting jobs; its cloud computing and artificial intelligence sales are strong.
Customer management software maker Salesforce is laying off workers and is the target of activist shareholders. But their argument is that Salesforce should spend less to increase profits. The company’s revenue rose 14% in its most recent quarter.
The relentless advancement of software in nearly every industry has made technology spending less cyclical.
Take the automotive business, for example. Hyundai is becoming a “truly software-defined vehicle,” said Alan Wechsler, GM’s senior vice president of innovation and development.