Global IT Spending Forecast: Gartner Predicts 6.8 Percent Growth in 2024
While the tech industry is grappling with layoffs, there is no lack of IT spending. The worldwide spending on IT is expected to reach $5 trillion in 2024 marking a jump of 6.8 percent from 2023, according to a new report by Gartner.
The latest report by Gartner, one of the leading market research and advisory firms, offers a unique perspective on IT spending across different segments including IT services, hardware, and software. Gartner had earlier predicted a growth rate of 8 percent for IT spending, so it has downsized its forecast. However, the expected increase in IT spending is still more than double the previous year’s growth rate.
Interestingly, according to Gartner the GenAI type will not significantly change the growth of IT spending in the near term.
“While GenAI will change everything, it won’t impact IT spending significantly, similar to IoT, blockchain, and other big trends we have experienced,” said John-David Lovelock, Distinguished VP Analyst at Gartner.
According to Lovelock, the year 2024 will be more about planning how to use GenAI. The major share of IT spending will continue to be driven by traditional forces such as labor and profitability. The spending will be negatively impacted by the continued wave of “change fatigue”, which is the feeling of being overwhelmed by too many organizational changes in a row.
The Gartner report highlights change fatigue is most common for CIOs, who are becoming increasingly reluctant to commit to long-term initiatives or take on board new technology partners. The CIOs want greater certainty of outcomes and a high level of risk mitigation for new initiatives.
Despite the challenge of change fatigue, IT services are expected to see the biggest growth (8.7 percent) in 2024, becoming the largest segment of IT spending for the first time in terms of total spending ($1.5 trillion). A key driving factor behind this unprecedented growth in IT services is the rise in enterprise investment in optimization projects and organizational efficiency.
The spending on IT devices is expected to rebound after a significant drop in IT spending in 2023, to a healthy 4.6 percent growth in 2024. The crash in spending on devices in 2023 was mainly due to the excess spending in this segment during the pandemic.
The spending on data center systems and software continues its upward trajectory with growth rates of 7.5 percent and 8.7 percent respectively. Gartner predicts communication services to be the slowest growing sector with 2.3 percent of total IT spending.
While IT was traditionally a back-office function, but has now become a major revenue line time. “Adoption rates among consumers for devices and communications services plateaued over a decade ago. Consumer spending levels are primarily driven by price changes and replacement cycles, leaving room for only incremental growths, so being surpassed by software and services was inevitable,” said Lovelock.
The Gartner report sheds light on market opportunities and challenges. Enterprises that can make smart investments in the IT services sector will be well-positioned to reap the rewards of this rapidly evolving segment in the long term.