30 Jan 2023
IDC Spending Guide Forecasts Nearly $1 Trillion in Future of Work Investments in 2023
NEEDHAM, Mass., January 30, 2023 – Hybrid work, once thought to be a temporary means of enabling enterprises to continue business operations through the COVID-19 pandemic, has become a mainstay for the global work landscape. To enable these hybrid work models, organizations are investing in a wide range of technologies and services to increase workforce productivity and enable new, more agile ways of working. A new forecast from the International Data Corporation (IDC) Worldwide: Future of Work - Spending Guide shows that organizations will spend nearly $1 trillion on the Future of Work (FoW) in 2023, an increase of 18.8% over 2022.
"Work models continue to evolve, but 37% of decision makers in a recent global survey* note that remote and hybrid work models will be an embedded part of accepted work practices, supported by a continued shift to the cloud, increasingly instrumented and interconnected physical workplaces, and intelligent digital workspaces," said Holly Muscolino, group vice president, Content Strategies and the Future of Work. "Organizations must make ongoing investments in digital technology to attract and retain talent, increase operational efficiency, and remain competitive."
IDC defines the future of work as a fundamental change to the work model to one that fosters human-machine collaboration, enables new skills and worker experiences, and supports a reimagined physical workplace and borderless digital workspace. IDC's FoW framework is designed to help organizations structure their work transformation strategies and scope future of work initiatives. The framework takes a holistic, integrated approach, encompassing three interrelated and interconnected pillars: Augmentation, Culture, and Space.
Space, which focuses on how the work environment must adapt to support the new hybrid workforce and new work culture, is the largest of the three pillars, accounting for nearly 60% of all FoW spending in 2023. The FoW work environment must be intelligent and dynamic, connected and secure, and independent of a physical place or specific time of day. The technology investments here must enable access to corporate resources and support collaboration to allow all workers to effectively contribute, whether full time or part time, local or remote, or permanent or temporary — and whether human or machine.
Augmentation, or enabling and embracing the new digital coworker, will be the second largest pillar with more than one third of FoW spending this year. More than half of this spending will go toward the hardware and software that workers need to be more productive while also allowing them the freedom to focus on higher-value activities and innovation. This includes technologies such as artificial intelligence (AI), robotics, process automation, and augmented and virtual reality (AR/VR). Augmentation will see the fastest growth in spending over the 2021-2026 forecast with a compound annual growth rate of 23.1%.
Culture, which is focused on engaged and empowered workers aligned to new digital skills, will account for the remaining 5% of FoW spending in 2023. Nearly two thirds of the spending for this pillar will go toward IT services and business services as organizations pursue work transformation through ongoing initiatives requiring continuous innovation and a new type of organizational agility.
From a technology perspective, the largest area of investment in 2023 will be hardware, where companies are expected to purchase more than $300 billion in endpoint devices, enterprise hardware, infrastructure as a service (IaaS), and robotics and drones. Software will be the second-largest area of spending this year at more than $276 billion. This includes investments in enterprise applications, content and collaboration, analytics and artificial intelligence, human resources applications, security, and software development and deployment. Software will also see the fastest spending growth with a CAGR of 21.7% over the five-year forecast period. IT services and business services in support of FoW efforts will be more than $185 billion combined in 2023.
"The investment organizations are making in Future of Work technologies worldwide will exceed $1.5 trillion by 2026, with growth in Asia/Pacific (excluding Japan and China) and China (PRC) outpacing other regions," said Karen Massey, research director, Customer Insights & Analysis. "Discrete manufacturing, process manufacturing, and professional services are the largest industries, controlling just over 40% of the FoW IT spend. Looking across the 26 use cases in IDC's Worldwide Future of Work Spending Guide, collaborative robotics, automated customer management, and interconnected collaborative workspace top the list."
The IDC Worldwide: Future of Work - Spending Guide assesses and sizes the end user investment opportunity related to the three Future of Work transformation pillars – Augmentation, Culture, and Space – that support transformation for an improved employee and workplace experience. Investment opportunity in this spending guide is presented across 10 programs, 26 use cases, and 22 technology categories, as well as 19 industries and nine geographic regions. The data provides valuable insights into this rapidly growing market and how the market will develop over the next five years.
About IDC Spending Guides
IDC's Spending Guides provide a granular view of key technology markets from a regional, vertical industry, use case, buyer, and technology perspective. The spending guides are delivered via pivot table format or custom query tool, allowing the user to easily extract meaningful information about each market by viewing data trends and relationships.
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International Data Corporation (IDC) is the premier global provider of market intelligence, advisory services, and events for the information technology, telecommunications, and consumer technology markets. With more than 1,300 analysts worldwide, IDC offers global, regional, and local expertise on technology, IT benchmarking and sourcing, and industry opportunities and trends in over 110 countries. IDC's analysis and insight helps IT professionals, business executives, and the investment community to make fact-based technology decisions and to achieve their key business objectives. Founded in 1964, IDC is a wholly owned subsidiary of International Data Group (IDG), the world's leading tech media, data, and marketing services company. To learn more about IDC, please visit www.idc.com. Follow IDC on Twitter at @IDC and LinkedIn. Subscribe to the IDC Blog for industry news and insights.
* IDC, Future Enterprise Resiliency & Spending Survey - Wave 11, IDC, December 2022.
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