As the potential for a recession and a decline in consumer spending grows, companies across sectors are signaling that they are cutting costs and either slowing hiring or laying off workers heading into 2023.
But technology executives say they're expecting to spend more on key initiatives like cybersecurity and new technology in the new year as well as grow or maintain their workforces even as a vast majority expect to see a recession soon if one is not already here, according to the latest CNBC Technology Executive Council survey.
Nearly three-quarters (74%) of respondents said they expect their companies to spend more on new technology in the next 12 months, while 22% said they expect spending to be about the same, according to the survey.
While both figures are slightly down since the last TEC survey in June when they were 75% and 25%, respectively, it also comes after the downturn in both stock price and business across the tech sector might suggest there would be a far more negative outlook. Roughly 4% of respondents said they would be spending less, compared to none in the previous survey.
Tech spending overall is forecast to rise about 5.1% next year after a gain of less than 1% this year, according to a recent survey by Gartner, effectively unchanged from the firm's surveys earlier this year. Some of that may reflect a feeling that companies that cut back on investment during previous downturns like the 2008 financial crisis badly lagged competitors in the years that followed.
Cloud computing, which received nearly unanimous support as "critically important" from TEC survey respondents, will likely be the recipient of that sustained spending. Gartner expects cloud computing revenues to rise to $101 billion next year, up from $90 billion in 2021. Cloud computing is expected to rise by 20% for the next two to three years, according to Gartner's forecast.
The CNBC Technology Executive Council second half survey was conducted from November 18 to December 9, with responses from 23 members of the Council, which includes executives in roles like chief technology officer and chief information officer across a variety of public and private organizations.
Despite the broader contractions and layoffs across the tech industry from companies including Meta and Twitter, a majority of the survey respondents (52%) said their companies would be keeping their tech headcount at the same level over the next 12 months. In fact, 39% said they expected their company's tech workforce to increase.
That will likely come by hiring some of those workers who were laid off at other tech companies. Fifty-six percent of respondents said that there is an opportunity to take advantage of other companies' hiring freezes and layoffs, while 35% said their company is facing similar talent-related headwinds.
Economists and other observers have indicated they're not afraid of a larger layoff contagion emanating from the recent cuts across tech. At CNBC's CFO Council Summit earlier this month in Washington, D.C., KPMG chief economist Diane Swonk waved off concerns about the recent layoffs when she said, "I'm not worried about those [tech] workers not getting jobs pretty quickly."
In November, the technology sector announced 52,711 job cuts, reaching a total of 80,978 this year, according to data from executive outplacement firm Challenger, Gray & Christmas.
While that is the most cuts across tech year-to-date since 2002 and 535% higher than the same period last year, it is not indicative of the wider job market. So far this year employers announced plans to cut 320,173 jobs, which while up 6% from 2021, represents the second lowest number on record since Challenger, Gray & Christmas started tracking job cuts in 1993. The previous low was in 2021.
It remains to be seen how a slowing economy could alter this trend.
Thirty-nine percent of respondents said the U.S. economy is already in a recession, while another 35% said a recession will come in the first half of 2023.
Technology executives signal spending in 2023 even as the sector goes through massive layoffs - CNBC
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