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Global IT spending to skyrocket to $5.13 trillion by 2024 with a surge of 8.8% – Gartner

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IT spending

Global IT spending is set to witness a significant increase of 4.3% in 2023, according to the latest forecast by Gartner. The total expenditure on IT worldwide, including software and communications services, is expected to reach $4.7 trillion in 2023, from $4.5 trillion in 2022. Furthermore, the trend is likely to continue with an impressive 8.8% surge in 2024, bringing the spending figure to approximately $5.13 trillion next year.

IT spending increased the most in the software segment

Among the various segments in the IT market, software stands out as the fastest-growing. Businesses are expected to spend a staggering $912 billion on software in 2023, marking a notable increase of 13.5% compared to 2022. This growth is set to continue, with an estimated 14% in 2024, reaching $1.04 trillion. Organizations are increasingly focusing on core applications and platforms that promote efficiency gains, such as enterprise resource planning (ERP) and customer relationship management (CRM) applications, leading to robust growth in the software segment.

IT services to become the largest market

IT services are anticipated to become the largest market by 2024, with Gartner estimating a 12% growth in spending, amounting to $1.58 trillion.. This segment has consistently experienced high single-digit growth as businesses seek more services from channel partners and vendors. In 2022, spending on IT services increased by 7.5% to $1.31 trillion, and this year, global spending on IT services is expected to grow annually by 8.8%, reaching $1.42 trillion.

According to Gartner, the advent of generative artificial intelligence (AI) is expected to further boost the IT services market, as this new technology will be primarily incorporated into enterprises through existing spending.

“Generative AI’s best channel to market is through the software, hardware, and services that organizations are already using,” said John-David Lovelock, Distinguished VP Analyst at Gartner. “Every year, new features are added to tech products and services as add-ons or upgrades. Most enterprises will incorporate generative AI in a slow and controlled manner through upgrades to tools that are already built into IT budgets.”

How other segments contribute to global IT spending

Data centers

One of the significant contributors to the IT spending surge is the rise in data center systems sales. In 2022, sales witnessed a remarkable spike of nearly 17%, amounting to $221 billion, as companies invested heavily in infrastructure and hardware to support their hybrid workforce and digital transformation initiatives.

However, Gartner predicts a slight cooldown in data center systems sales this year, with a fall of 1.5% to $218 billion in 2023. Nevertheless, data center hardware spending is expected to bounce back in 2024, with an anticipated growth of 8.1% to $235 billion.

Devices

While the overall outlook for enterprise IT spending remains positive in 2023, the spending on devices is projected to decline by 8.6% to $700 billion, mainly due to the ongoing impact of inflation on consumer purchasing power. However, the devices market is expected to witness a rebound in 2024, with spending projected to increase by 3.8% annually, reaching $748 billion.

Communication services

Communications services are an important part of the IT market. This segment is projected to reach $1.46 trillion in 2023, representing a 2.7% increase in spending compared to the previous year. The market is expected to continue its growth momentum, with spending levels reaching a record $1.52 trillion in 2024.

Gartner’s forecast presents a promising outlook for the worldwide IT spending landscape, driven by businesses’ endeavors to embrace automation, efficiency technologies, and innovative solutions to foster growth and adapt to the changing workforce dynamics.

Source: Gartner

Read next: Managed services surge to a new quarterly high of $10.0 billion in Q2 2023 – ISG

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