Despite the global economic uncertainties, worldwide IT spending is expected to total $5.06 trillion in 2024, an increase of 8% from 2023, according to the latest forecast by Gartner. This is a slight revisal of the market research agency’s earlier forecast of a 6.8% growth and puts worldwide IT spending on track to surpass $8 trillion well before the end of the decade.
The latest number reflects a considerable surge in the overall IT spending growth rate, which was a meagre 3.3% in 2023, only a 0.3% increase from 2022. Gartner had highlighted that the slump in spending in the past year was largely due to change fatigue among CIOs, as they hesitate to sign new contracts, commit to long-term initiatives or take on new technology partners.
Talent gap might be fueling demand for IT services
IT services spending will continue to witness strong growth according to the agency with close to 10% growth. This growth, according to Gartner, is largely driven by the fact that enterprises will rely heavily on IT services firm for their IT talent needs, instead of investing on internal staff – a strong indicator of the persisting talent shortage in the industry.
“Enterprises are quickly falling behind IT service firms in terms of attracting talent with key IT skill sets. This creates a greater need for investment in consulting spend compared to internal staff. We are at an inflection year for this trend, with more money being spent on consulting than internal staff for the first time,” said John-David Lovelock, Distinguished VP Analyst at Gartner.
GenAI to see more execution in 2025
GenAI is expected to drive substantial data center systems spending in 2024, as more organization move to execution phase in 2025. Gartner predicts that spending on data center systems is expected to see a notable jump in growth from 2023 (4%) to 2024 (10%), in large part due to planning for generative AI (GenAI).
“We are seeing a cycle of story, plan, execution when it comes to GenAI. In 2023, enterprises were telling the story of GenAI and in 2024 we are seeing most of them planning for eventual execution in 2025,” said Lovelock. “Technology providers are required to be a step ahead of this cycle and are already in the execution phase. They are bringing GenAI capabilities to existing products and services, as well as to use cases being identified by their enterprise clients.
“There is also gold rush level spending by service providers in markets supporting large scale GenAI projects, such as servers and semiconductors,” said Lovelock. “In 2024, AI servers will account for close to 60% of hyperscalers total server spending.”
