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IT Spending Trends for 2024

IT Spending Trends for 2024

Global IT spending is expected to hit $5 trillion in 2024, up 6.8% from 2023. This represents a significant shift in the allocation of business resources towards IT investments.

According to Gartner, Inc., this increase shows that companies are rethinking their digital plans at a very important time. Companies are putting more emphasis on advanced technologies to stay ahead of the competition in a digital world that is changing quickly. This is causing a paradigm shift in IT spending and emphasizing the importance of staying on the cutting edge of technology.

WORLDWIDE IT SPENDING FORECAST (MILLIONS OF US DOLLARS)

2022 Spending 2022 Growth (%) 2023 Spending 2023 Growth (%) 2024 Spending 2024 Growth (%)
Data Center Systems 227,021 19.7 237,703 4.7 260,221 9.5
Devices 766,279 -6.3 689,288 -10.0 722,472 4.8
Sofware 811,314 10.7 916,240 12.9 1,042,386 13.8
IT Services 1,305,699 7.51 401,038 7.3 1,547,349 10.4
Communications Services 1423,128 -1.9 1,449,286 1.8 1,497,345 3.3
Overall IT 4,533,441 2.9 4,693,556 3.5 5,069,773 8.0

“2024 will be the year when organizations actually invest in planning for how to use GenAI. While GenAI will change everything, it won’t impact IT spending significantly, similar to IoT, blockchain and other big trends we have experienced,”

 - John-David Lovelock, Distinguished VP Analyst at Gartner.

The Role of Digital Transformation in 2024 IT Spending

Zippa says that 70% of companies either have a digital transformation plan or are working on one right now.
This means that "digital transformation" is no longer just a trendy word. Companies in many fields are already using digital tools to,

  • become more efficient, 
  • make the customer experience better
  • come up with new products and services.

As businesses are investing in new tools and technologies to adapt to this change, their IT spending proportionally increases.

SMBs and Enterprise IT Spending Trends in 2024

Small businesses and large companies spend money on IT to find custom solutions that are both cost-effective and scalable. The main focus is on the following areas:

  • Cloud Services
  • Artificial Intelligence
  • IT Services
  • Software Development
  • Communication Devices
  • Data Centers
  • Predictive Analytics
  • Remote Offshore Teams
  • Sustainability
  • Cybersecurity

2024 IT Spend on Cloud Computing

WORLDWIDE PUBLIC CLOUD SERVICES END-USER SPENDING FORECAST (MILLIONS OF U.S. DOLLARS)

2022 2023 2024
Cloud Application Infrastructure Services (PaaS) 111,976 138,962 170,355
Cloud Application Services (SaaS) 167,342 197,288 232,296
Cloud Business Process Services (BPaaS) 59,861 65,240 71,063
Cloud Desktop-as-a-Service (DaaS) 2,525 3,122 3,535
Cloud Management and Security Services 34,487 42,401 51,871
Cloud System Infrastructure Services (laaS) 114,786 150,310 195,446
Total Market 490,977 597,325 724,566

According to Gartner, IT spending on the cloud will hit beyond $700 billion by the end of 2024. This shows that IT spending is shifting a lot toward cloud computing.

An OpsRamp poll shows that most IT leaders want to move more tasks to the cloud within the next 24 months.

The main reasons given are:

  • To achieve better cost control (47%)
  • For better scalability and flexibility (62%)

The move from standard on-premise solutions to cloud services is being driven by the benefits of the cloud itself. This is also changing IT spending, with a clear trend toward subscription-based models over big capital investments.

A relevant example of a company focusing its IT spending on cloud computing is found in McKinsey's research.

For instance, one large energy company collaborated with Microsoft Azure to create a digital platform using cloud services. This platform utilizes satellite data

to monitor methane emissions, enabling quick responses to gas leaks and emissions irregularities.

Additionally, a major insurer utilized AWS Lambda for serverless computing to develop new business and underwriting solutions, achieving significant improvements in performance compared to industry averages.

These cases demonstrate how cloud computing is not only driving IT spending but also enabling businesses to innovate and achieve operational efficiencies.

2024 IT Spend on Artificial Intelligence

The IT industry is going through a big change in 2024 because of progress in Artificial Intelligence (AI). The main focus is on adding AI to products and services that companies already use.

The goal of this merger is to solve long-standing problems in areas such as retaining customers and making marketing more effective.

People are still very excited about generative AI (GenAI), and they think it will have huge effects within the next three years. However, AI will likely be gradually incorporated into current systems.

In 2020, businesses around the world spent about $50 M on tools that use artificial intelligence (AI).

The following use cases account for almost a third of all the money that was spent on AI in 2020:

  • automated customer service personnel,
  • sales process recommendations and automation,
  • automated threat intelligence and protection,
  • IT automation

IDC says that it will more than double to $110 B by 2024. IDC's Worldwide Artificial Intelligence Spending Guide says that there are 27 uses for AI right now. It's mostly because companies want to improve customer service and help workers do their jobs better.

IDC says that by 2025, Global 2000 (G2000) companies will spend more than 40% of their main IT budget on AI projects. This will lead to a tenfold rise in the number of new products and processes.

"Every IT company will put money, brainpower, and time into making AI a core part of their business,"

 - Rick Villars, group vice president, Worldwide Research at IDC.

Also, GenAI is being used more and more, which should improve edge computing use cases by giving customers and businesses more relevant experiences that meet their needs.

2024 IT Spend on IT Services

There will be more growth in IT services in 2024, and they will become the biggest category of IT spending for the first time. By the end of 2024, $1.5 trillion will have been spent on IT services, an increase of 8.7%. This is mostly because companies are spending money on projects to make their organizations more efficient and effective. During this time of economic instability, these investments will be very important.

"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.

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."

 - John-David Lovelock, Distinguished VP Analyst at Gartner.

2024 IT Spend on Software Development

In 2024, the global spending will reach more than $1 trillion on software. It is expected to hit $1.03 trillion, which is a record high.

From 2023's $913 billion, this is a huge 13% increase year-over-year, showing an exciting growth in the software industry.

Notably, spending on software had already grown by an impressive 12% from the previous year by 2023. This trend shows a great chance for companies to take advantage of the growth in the software industry and follow the newest software development trends to help their business gain competitive edge over other competitors.

2024 IT Spend on Communication Devices

The Communication Services market is growing very quickly, and by 2024, it's expected to have reached a peak income of US$1.5 trillion. Mobile Data is the market leader in this strong area, which is projected to have a market value of US$0.6 trillion in the same year. The market is expected to keep growing steadily, with a compound annual growth rate (CAGR) of 1.99% from 2024 to 2028. By 2028, the market will have grown to a size of US$1.6 trillion.

2024 IT Spend on Communication Devices

With an expected income of US$337 billion in 2024, the United States comes out as a major player in this global market. This shows how dominant it is in the communication services sector.

The COVID-19 world outbreak in 2020 and 2021 was a big reason why the market grew so quickly. During this time, companies in many fields quickly learned how to work in new ways, which led to a rise in demand for online work communication tools like Zoom. This change was a turning point in the market for information services, leading to big investments and new ideas.

Because of the outbreak, however, the market's progress has changed. The rate of growth has slowed down since the original boom. According to Gartner, the market only grew by 1% from the previous year to the following year in 2023. This slowdown is a phase of stabilization where the market is getting used to a more stable growth pattern after the rapid increase during the pandemic.

2024 IT Spend on Data Centers

In 2024, the market for data center systems is projected to grow a lot. It will reach $261 billion, which is 7.5% more than the $243 billion that was spent in 2023. Important data center gear like computers, storage, power, and networking hardware are all in this market. The market is showing signs of recovery, even though overall sales growth has been the slowest in recent years.

The Network Infrastructure sector is a big reason for this increase. It will have a market value of $197.80 billion in 2024, making it the biggest in the world. In the same year, the Data Center market is expected to bring in a total of US$340.20 billion. In the years to come, the market is expected to grow at a rate of 6.56% per year (CAGR 2024–2028), hitting a total of US$438.70 billion by 2028.

The fast development of technologies like GenAI, along with denser deployments and general computing CPUs that use more power, has sped up the need for more power in data center racks, going above and beyond what was expected in 2023. This trend is likely to keep going in 2024, when rack density is likely to rise even more. To keep up with these changes, data center providers are increasingly looking for new cooling methods and creative ways to plan their buildings.

2024 IT Spend on Predictive Analytics

In 2021, the global Predictive Analytics Market was worth USD 10.5 billion. By the end of 2026, it's expected to be worth USD 28.1 billion, thanks to a compound annual growth rate (CAGR) of 21.7%.

Predictive Analytics software and services are likely to become more popular because of things like more use of Al and ML, corporate acquisition deals, and new product launches in this market.

Predictive analytics is a very important part of IT planning. Companies can make better choices about where to spend their IT funds when they use data. People use predicting tools and methods to,

  • guess what tech trends will emerge,
  • figure out impending risks,
  • choose where to spend their future budget.

Amazon's use of predictive analytics shows how data can help different areas make smart decisions.

For instance, Amazon uses prediction analytics in supply chain management to guess how much merchandise it will need, plan for future demand, and make transportation easier. This helps cut down on overstock and stockouts, which makes better use of resources.

Predictive analytics helps customer service agents understand what customers want and how they act, which lets them make personalized suggestions and send targeted ads. These uses of predictive analytics help Amazon improve the customer experience, run its business more efficiently, and make smart investments in IT and business.

This shows how powerful data-driven decisions can be in a big business setting.

2024 IT Spend on Offshore Teams/Remote Work

At a growth rate of 23.8% per year, the market for remote office services will rise from $20.10 billion in 2022 to $58.5 billion by 2027.

Companies are spending in different tools to support a spread workforce, which is what is causing this growth. Some of these investments are computer services, safe online access systems, and tools for working together.

The goal is to make sure that people who work from home (both in-house and offshore teams) are safe and productive.

Companies are also focusing on training and helping their workers get used to the new working conditions. The growing market for remote offshore office services shows a big change in how IT is spent, showing how important digital tools and technology are for working from home.

2024 IT Spend on Sustainability

The International Data Corporation's (IDC) forecasts show that the combination of ecology and technology is becoming more and more important in business.

Spending on Environmental, Social, and Governance (ESG) business services will rise from $37.7 billion in 2023 to almost $65.0 billion in 2027, according to IDC.

This is a 14.9% compound annual growth rate (CAGR) over the period of 2022–2027.
Companies are taking sustainability into account in their main business plans because they know that it has a big effect on,

  • Risk levels
  • Practical success
  • Financial success
  • creating long-term value.

Businesses that prefer sustainability first are not only positively reacting to rising customer and government standards, but they are also setting themselves up for future growth and robustness.

This move toward sustainability is showing up in different ways in the IT world.

Companies are spending more and more on IT on tools that use less energy, data centers that are better for the environment, and "green" IT practices.

People are following this trend because they know that technology is an important part of reaching green goals. Companies can help make the future more sustainable by investing in green IT solutions that lower their running costs and leave less of an impact on the environment.

2024 IT Spend on Cybersecurity

In the 2024 Gartner CIO and Technology Executive Survey, 80% of CIOs said they were going to spend more on cyber/information security in 2024. This was the most common type of technology that was said to be getting more investment.

“AI has created a new security scare for organizations. Gartner is projecting double-digit growth across all segments of enterprise security spending for 2024.”

 - Lovelock, Distinguished VP Analyst at Gartner

Companies are putting more of their IT funds into security because of the rise in online dangers. People are becoming more aware of how important it is to protect digital data, as shown by this trend.

Target is a real-life example of a company that spends a lot of money on IT protection.

Target was hit by a huge data breach in 2013 in which hackers got access to payment card information from customers. A strong security system could have helped prevent this incident.

Hence, a lot of money is being put into,

  • Improved danger detection systems,
  • Training for workers on cybersecurity,
  • Safe data storage systems.

Bottom Line

Investments in the above-mentioned areas will become crucial for sustainable growth and innovation in the coming years.
Softura can help businesses with tailored insights to meet their technological requirements. As Softura has expertise in dealing with cutting-edge technologies for over 25 years, we can help businesses adapt to these new trends by giving them customized IT solutions and strategic guidance.

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