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Businesses made significant cuts to their enterprise technology budgets last year, and IT belt-tightening is likely to continue into 2023, according to The Wall Street Journal (subscription).

What’s going on: “Global IT spending contracted 0.2% in 2022, dropping to $4.38 trillion—a rare instance of corporations spending less on digital business tools than in the previous year, according to IT consulting and research firm Gartner Inc.”

• The company now forecasts a 2.4% IT-spending increase among businesses in 2023, less than half what it estimated in October.
• Spending on personal computers, smartphones and other devices are experiencing the biggest drops, following a steep increase in outlay at the beginning of the pandemic, when employers outfitted teams for remote work.

Why it’s happening: In the face of recession concerns and elevated inflation, businesses are “spending smarter” when it comes to IT.

• “‘We just don’t have the capacity to focus on 10 things,’ said Dani Brown, chief information officer of Whirlpool Corp. Ms. Brown said her spending priorities involve ‘foundational’ aspects of IT, such as software that promises to unlock business value, IT modernization and hiring.”

Holding steady: However, two areas that are expected to maintain spending levels year-over-year are business software and IT services, which “together [are expected to account] for more than $2.16 trillion in projected spending in 2023, Gartner said.