A report released Monday by private investment firm Bain Capital says that despite numerous disruptions to the tech industry, including a global supply chain crisis and Russia’s invasion of Ukraine, most of IT decision makers predict either stable budgets or increases for the coming year.
Over the past two years, the effects of the pandemic on this figure have been noticeable – at first less than half of respondents said they expected anything other than a decrease in their budget for the coming year. However, the number has changed rapidly as the economy emerges from the worst effects of the COVID crisis, with 75% in 2021 and 90% in 2022 saying they expect stable or increasing budgets to come.
That number fell in the latest report – to 77% – but it’s still an indicator of strong demand for products and services in a sector that still faces more than its share of headwinds, according to the head of technology practice. Bain World, David Crawford.
“CIOs and CTOs are increasing their technology spend,” he wrote in the report. “Of course, there could be budgetary pressure in the future, but in the long term, for them – and for us – technology is not so much a cost as an investment that drives productivity.”
Much of the report is dedicated to vendors and their potential best actions to deal with a tough economic situation, providing insight into what IT departments can expect from the companies they do business with in the future.
Along with changes to streamline sales and reduce travel, companies can expect some of their suppliers to move towards consumption-based pricing, thanks to higher demand for this model, and do more strategic work around product development, as Bain’s research shows. that the return on investment of R&D expenditure is often not at the level sought by management.
The token shortage, according to Bain, is gradually easing, but the recovery is unlikely to be particularly quick or painless. Given global economic conditions, a simple decrease in demand may be one of the most important factors contributing to the recovery of the silicon market, and the company’s researchers have identified two other factors that may determine the duration or duration of recovery.
Extreme ultraviolet lithography equipment—$150 million machines that are needed for the latest generation of silicon and are only made by one manufacturer—represent a current bottleneck for building manufacturing capabilities.
Additionally, geopolitical frictions between many countries present their own obstacles to recovery, as import restrictions make it difficult to source key resources. Russia’s restriction on the sale of noble gases such as neon, which is important for the manufacture of silicon, Japan’s tightening control over the supply of high-purity hydrogen fluoride and similar trade issues are likely to ‘aggravate the shortage of chips in the short term, unless these problems can be solved.