The digital transformation journey continues to gain momentum across the industries. According to Gartner‘s latest forecast, worldwide IT spending is expected to grow a total of $5 trillion in 2024, an increase of 6.8% from 2023.
IT services will continue to see a boost in growth in 2024, becoming the largest segment of IT spending for the first time. Spending on IT services is expected to grow 8.7% in 2024, reaching $1.5 trillion. This is mainly due to enterprises investing in organizational efficiency and optimization projects. These investments will be crucial during this period of economic uncertainty.
Software spending is expected to grow by 4.6% in 2024, reaching $0.73 trillion. Spending on devices is expected to grow 12.7% in 2024, reaching $1 trillion.
“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 John-David Lovelock, Distinguished VP Analyst at Gartner. “Enterprises continue to find more uses for technology – IT has moved out of the back office, through the front office and is now revenue producing, until there is a plateau for how and where technology can be used in an enterprise, there cannot be a plateau in enterprise IT spending.”
Worldwide IT Spending Forecast (Millions of U.S. Dollars)
CIOs’ Change Fatigue Continues to Impact IT Spending
The overall IT spending growth rate for 2023 was 3.3%, only a 0.3% increase from 2022. This was largely due to change fatigue among CIOs. Momentum will regain in 2024, with overall IT spending increasing 6.8%.
Even with the expected regained momentum in 2024, the broader IT spending environment remains slightly constrained by change fatigue. Change fatigue could manifest as change resistance — with CIOs hesitating to sign new contracts, commit to long-term initiatives, or take on new technology partners. For the new initiatives that do get launched, CIOs require higher levels of risk mitigation and greater certainty of outcomes.
The worldwide IT spending is down from the previous quarter’s forecast of 8% growth. While generative AI (GenAI) had significant hype in 2023, it 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 Lovelock, Distinguished VP Analyst at Gartner. “2024 will be the year when organizations actually invest in planning for how to use GenAI, however IT spending will be driven by more traditional forces, such as profitability, labor, and dragged down by a continued wave of change fatigue.”