Global IT Spending Expected to Reach $5.1 Trillion by 2024, With Generative AI Impact to Unfold by 2025
According to a new report by US research firm Gartner, global spending on information technology is projected to hit approximately $5.1 trillion in 2024. However, the report also reveals that the impact of generative artificial intelligence (AI) will not be fully felt until 2025. In the meantime, generative AI is expected to account for only a small portion of IT spending this year and next, gradually becoming a significant factor in company budgets by 2025.
Despite this trend, organizations are continuing to invest in AI and automation to enhance operational efficiency and bridge gaps in IT talent. The hype surrounding generative AI contributes to this trend, as chief information officers recognize the importance of current AI projects in developing a comprehensive AI strategy before generative AI becomes a substantial part of their IT budgets.
Gartner’s latest report aligns with its recent study that suggests generative AI is overhyped, ranking it at the peak of inflated expectations for emerging technology in 2023, trailing closely behind AI-augmented software engineering and cloud technology.
Generative AI gained prominence with the emergence of ChatGPT, the conversational platform developed by Microsoft-backed OpenAI, which initiated a race among technology companies and personalities. The technology is expected to deliver transformative benefits within the next two to five years, after which progress is likely to plateau.
Although generative AI has not yet made a significant impact on IT spending, broader investment in AI continues to drive overall IT spending growth. In 2024, software spending is anticipated to increase by nearly 14% to exceed $1 trillion, leading the IT spending growth. IT services are also expected to experience double-digit growth of 10.4%, reaching nearly $1.55 trillion in value.
This growth in software and IT services can be largely attributed to the rise of cloud technology. Global spending on public cloud services is projected to surge by 20.4% in 2024 due to a combination of increased use and price hikes by cloud sellers.
Gartner’s report further indicates that data center systems, devices, and communication services will see growth rates of 9.5%, 4.8%, and 3.3%, respectively. The value of communication services is expected to reach close to $1.5 trillion.
The boost in software spending is also fueled by increased investment in cybersecurity. The emergence of AI has created new security concerns for organizations, leading many chief information officers to prioritize spending on cyber and information security in 2024. In fact, cybersecurity is projected to be the top technology category for increased investment, with about 80% of chief information officers planning to allocate more funds to this area.
However, Gartner suggests that a portion of IT spending this year is being postponed to 2024 due to change fatigue experienced by chief information officers. This hesitation to invest in new projects and initiatives is expected to continue into 2025. Factors contributing to this delay include pragmatic decision-making, capital restrictions, and concerns about profit margins. Organizations are now focusing more on cost control, efficiency, and automation, curtailing longer-term IT initiatives.
In conclusion, the global IT spending landscape is predicted to reach $5.1 trillion by 2024, with generative AI gradually becoming a significant aspect of future IT budgets beyond 2025. Software and IT services, fueled by the rise of cloud technology and cybersecurity concerns, are driving overall IT spending growth. However, a portion of IT spending is being delayed due to change fatigue and a shifting emphasis towards cost control and efficiency.
