145 million SMBs worldwide to spend $1.45 trillion on technology this year, up 6.3% over 2022: Report

Technology for MSMEs: 145 million small and medium businesses (SMBs) globally are likely to spend $1.45 trillion on information technology in 2023, driven by the post-pandemic trend towards digital transformation, said a report by global management consultancy Analysys Mason. The report, predicting the increase in technology spending by SMBs in 2023, said the spending will grow by 6.3 per cent over 2022 spending, though down from 7 per cent year-on-year growth that was expected before the pandemic.

Of the 145 million SMBs, 40 per cent are from the Americas, 30 per cent from Europe, the Middle East and Africa and 30 per cent from Asia–Pacific. The predictions were based on the data in Analysys Mason’s SMB Technology Forecaster which offers insights into SMB spending in 132 technology categories in 52 countries. 

Also read: 55% of MSMEs use mobile hotspots to connect to the internet for daily activities: Report

The report, launched earlier this year, predicted a shakeup in how vendors and the reseller channel sell to SMBs as 37 per cent of SMBs plan to switch channel partners to get enterprise levels of service and support. 

SMB behaviour also changed significantly towards cloud-based and on-demand solutions. The report noted that SMBs are likely to spend 18 per cent more YoY this year on platforms-as-a-service (PaaS) solutions from $3.4 billion in 2022 to 4.0 billion in 2023. Similarly, software-as-a-service (SaaS) spending is also estimated to jump from $44 billion in 2022 to $54 billion by 2023, representing a 22 per cent YoY growth. 

“SMB technology spending is gradually getting back to pre-pandemic levels,” said Bob Takacs, Research Director, Analysys Mason in a statement. The company focuses on technology, media & entertainment, and telecom sectors and offer consultancy on strategy, transaction support, transformation, and regulation and policy. 

Also read: Spice Money and BCG to build a digital financial service platform for rural India

“There is concern about the broader economic environment, but SMBs are confident in their own businesses given that they pulled through the pandemic and are focused on how they can be set up for growth,” he added. 

Among other key predictions around SMB spending on technology in 2023 were: 

• 24 per cent of SMBs worldwide plan to start environmental, social and governance (ESG) initiatives
• 46 per cent are more likely to buy from vendors with established ESG policies 
• Spending on cyber-security solutions will increase from $69 billion in 2022 to $77 billion in 2023 
• SMBs’ IT spending through MSPs (managed service providers) is also likely to jump by 11 per cent from $279 billion in 2022 to $311 billion in 2023 amid the need for end-to-end support in managing increasingly complex software stacks and driving forward digital initiatives
• SMBs to spend over $66 billion on IT solutions from telecoms operators 

Subscribe to Financial Express SME (FE Aspire) newsletter now: Your weekly dose of news, views, and updates from the world of micro, small, and medium enterprises