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Spending on cloud services will exceed $591 billion in 2023

by Alice Trout
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Global spending on public cloud services will grow 20.7% to $591.8 billion in 2023, according to the latest forecast released by Gartner Inc.

The research firm also released its spending forecast for 2022. Gartner expects organizations to spend $490.3 billion on cloud services this year, up 18.8% from the $412.6 billion invested during 2021. The fact that the market is projected to accelerate from 18.8 percent in 2022 to 20.7 percent in 2023 reflects the growing demand for cloud services by enterprises.

“Current inflationary pressures and macroeconomic conditions are impacting enterprise spending on cloud technology,” said Gartner vice president and analyst Sid Nag. “Cloud computing will remain a bastion of security and innovation. In challenging times, they sustain growth because of their flexibility, elasticity and scalability.”

Gartner’s forecast divides the cloud services market into six major segments. The segment expected to grow the fastest in 2023 is Infrastructure-as-a-Service (IaaS). Gartner estimates that IaaS spending will increase by at least 29.8% next year to $150.2 billion. Read also: SaaS marketing tools.

“The migration to the cloud doesn’t stop,” Nag said. “IaaS will naturally continue to evolve as companies step up their IT modernization initiatives to minimize risk and optimize costs. Moving operations to the cloud also reduces capital costs by spreading cash costs over the life of the subscription, a key advantage in an environment where cash can be critical to maintaining operations.”

The Platform as a Service (PaaS) and Software as a Service (SaaS) segments are expected to grow 23.2% and 16.8%, respectively. PaaS spending will grow from $110.6 billion this year to $136.4 billion in 2023. Over the same period, SaaS budgets will grow from a combined $146.3 billion to more than $195.2 billion.

Gartner’s forecast for the cloud services market also covers three other segments. These are the Desktop as a Service (DaaS), Cloud Management and Security and Business Process as a Service (BPaaS) segments.

“Desktop as a Service” is a general term for platforms that a company can use to provide cloud-based workstations to its employees. Such workstations are easier to manage than traditional personal computers. According to Gartner, DaaS spending will reach $2.53 billion this year and $3.1 billion in 2023.

The cloud management and security category in Gartner’s market forecast covers products that make it easier for companies to maintain and protect the cloud offerings they purchase. The research firm expects spending in this area to reach $41.6 billion next year, up from $34.1 billion in 2022. 

The sixth major area of Gartner’s forecast is the Business Process as a Service, or BPaaS, category. This category includes cloud-based business process outsourcing offerings, which are services that help organizations solve problems such as application maintenance. Gartner predicts the BPaaS segment will grow to $60.1 billion this year and $65.1 billion in 2023.

In 2023, the cloud services market will grow much faster than overall IT spending. Gartner expects global IT spending to grow 5.1% to $4.6 trillion in 2023.

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