According to the latest forecast by Gartner, Inc., global IT spending is projected to reach a total of $5 trillion in 2024, reflecting a 6.8 percent increase compared to 2023. This growth rate is lower than the previous quarter’s forecast of 8 percent. Despite the significant hype surrounding generative AI (GenAI) in 2023, it is not expected to have a significant impact on the growth of IT spending in the near future.
John-David Lovelock, distinguished VP analyst at Gartner, stated that although GenAI has the potential to revolutionize various aspects, including IT, its influence on IT spending will be similar to previous major trends like IoT and blockchain.
Lovelock emphasized that 2024 will be the year when organizations begin investing in planning how to utilize GenAI effectively. However, the primary drivers of IT spending in the near term will be more traditional factors such as profitability and labor. Additionally, there will be a drag on IT spending due to the ongoing wave of change fatigue.
Read more: Global IT spending to reach $4.6 trn in 2023: Report
IT services becomes largest segment of IT spending in 2024
IT services, on the other hand, are projected to maintain their growth trajectory in 2024. They are anticipated to become the largest segment of IT spending for the first time. It is also expected that spending on IT services will increase by 8.7 percent in 2024, reaching a total of $1.5 trillion. This growth can be attributed to enterprises investing in projects focused on enhancing organizational efficiency and optimization. Such investments are considered crucial during a period of economic uncertainty.
Lovelock said that consumer adoption rates for devices and communications services reached a plateau over ten years ago. Consequently, consumer spending levels are predominantly influenced by price fluctuations and replacement cycles, limiting the potential for substantial growth. Therefore, it was inevitable that software and services would surpass consumer spending in significance.
However, Lovelock highlightexd that enterprises are continually discovering new applications for technology. IT has transitioned from being solely a back-office function to a front-office role, and it now contributes to revenue generation. As long as there are untapped opportunities for technology utilization within enterprises, there won’t be a plateau in enterprise IT spending.
The Impact of CIOs’ change fatigue on IT spending
In 2023, the overall growth rate of IT spending was 3.3 percent, which only saw a slight increase of 0.3 percent compared to 2022. This modest growth can be attributed to change fatigue experienced by Chief Information Officers (CIOs). However, there is optimism for a rebound in 2024, with an anticipated overall increase in IT spending of 6.8 percent.
Despite the expected resurgence in 2024, the IT spending landscape continues to be somewhat constrained by change fatigue. This fatigue may manifest as resistance to change, leading CIOs to hesitate in signing new contracts, committing to long-term initiatives, or engaging new technology partners. When launching new initiatives, CIOs are seeking higher levels of risk mitigation and greater certainty of outcomes.
Gartner’s IT spending forecast methodology relies on a rigorous analysis of sales data. This data is collected from a wide range of IT product and service vendors. The analysis encompasses primary research techniques and is supplemented by secondary research sources. This comprehensive database of market size data forms the foundation for Gartner’s forecasts.
The Gartner quarterly IT spending forecast offers a unique perspective. It focuses on IT spending across various segments, including hardware, software, IT services, and telecommunications. These reports assist Gartner clients in understanding market opportunities and challenges.
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