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.”

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A new forecast from Gartner indicates that Generative AI is all set to transform the cybersecurity space in India. The emergence of generative AI (GenAI) has caused one of the biggest disruptions in digital and business sectors in the last couple of years. “Through ethical, safe and secure implementation of this technology, CISOs can improve the performance of their security functions and enhance organizational resilience,” said Abhyuday Data, Director Analyst at Gartner. 

While managing GenAI presents inevitable challenges, there are also external factors to consider, such as regulatory concerns and the rapid adoption of cloud computing.

To effectively handle the combined impact of these forces and enhance their organization’s cybersecurity program in 2024, Gartner recommends that CISOs in India must prioritize two top cybersecurity trends:

GenAI Transforming the Cybersecurity Market: GenAI introduces new attack surfaces requiring  changes to application and data security practices and user monitoring. Gartner predicts that by 2025, GenAI will cause a spike in the cybersecurity resources required to secure it, causing more than a 15% incremental spend on application and data security.

Gartner analysts said organizations should conduct proof of concepts before incorporating GenAI into their cybersecurity programs, beginning with application security and security operations. A policy for overseeing the introduction of GenAI-based products into the organization must also be established, to ensure that all internal teams using this technology understand and adhere to a set of unified policies.

Bridging the Communications Gap with Cybersecurity Outcome-Driven Metrics: Outcome driven metrics (ODMs) are central to creating a defensible cybersecurity investment strategy. They provide a credible and defensible expression of risk appetite that supports direct investment.

“ODMs enable SRM (security & risk management) leaders to convey the value of cybersecurity investment beyond the importance of regulatory compliance,” said Data. “Organizations seeking an approach to measure cybersecurity value that resonates with executives and supports practical investment decisions must adopt ODMs.”

Spending in security to grow

Gartner forecasts that end-user spending on security and risk management (SRM) in India is expected to total $2.9 billion in 2024, an increase of 12.4% from 2023. 

Indian organizations will continue to increase their security spending through 2024 due to legacy IT modernization using cloud technology, industry demand for digital platforms, updated regulatory environment, and continuous remote/hybrid work.

In 2024, cloud security spending in India is projected to record the highest growth. The adoption of cloud and multi-cloud presents security challenges, causing an increased focus on cloud security by Indian organizations.

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Only 8% of customers used a chatbot during their most recent customer service experience, according to a survey by Gartner. Of those, just 25% said they would use that chatbot again in the future.

Despite customer service and support leaders’ growing focus on chatbots, customer use of them remains low, suggesting they don’t consistently help customers accomplish their goals.

A Gartner survey of 497 B2B and B2C customers from December 2022 through February 2023 found the ability of a chatbot to move the customer’s issue forward was the top driver of adoption, explaining 18% of the variance in customers’ likelihood to use their chatbot again.

“While many customer service and support leaders look to chatbots as the future of the function, customers clearly need some convincing,” said Michael Rendelman, Senior Specialist, Research, in the Gartner Customer Service and Support practice. “To improve chatbot adoption, the key is to focus on improving the chatbot’s ability to move customers’ issues forward.”

Chatbots Resolve 58% of Returns and Cancellations, but Only 17% of Billing Disputes

Resolution rates vary greatly by issue type: Just 17% of billing disputes are resolved by customers who used a chatbot at some stage in their journey (see Figure 1), while resolution rates for customers making a return or cancellation were as high as 58%. 

While service organizations have a deep understanding of the capabilities and limitations of their chatbots, and what issues are a good match for chatbots to resolve, customers do not. The survey found customers are just 2% more likely to use a chatbot for a return/cancellation than use it for a billing dispute, despite a significant difference in resolution rates between the two.

“Chatbots aren’t effective for all issue types,” said Rendelman. “As generative AI makes them more advanced, customer confusion about what chatbots can and can’t do is likely to get worse. It’s up to service and support leaders to guide customers to chatbots when it’s appropriate for their issue and to other channels when another channel is more appropriate.”

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Worldwide end-user spending on public cloud services is forecast to grow 21.7% to total $597.3 billion in 2023, up from $491 billion in 2022, according to the latest forecast from Gartner. Cloud computing is driving the next phase of digital business, as organizations pursue disruption through emerging technologies like generative artificial intelligence (AI), Web3 and the metaverse.

“Hyperscale cloud providers are driving the cloud agenda,” said Sid Nag, Vice President Analyst at Gartner. “Organizations today view cloud as a highly strategic platform for digital transformation, which is requiring cloud providers to offer more sophisticated capabilities as the competition for digital services heats up.”

“For example, generative AI is supported by large language models (LLMs), which require powerful and highly scalable computing capabilities to process data in real-time,” added Nag. “Cloud offers the perfect solution and platform. It is no coincidence that the key players in the generative AI race are cloud hyperscalers.”

All segments of the cloud market are expected see growth in 2023. Infrastructure-as-a-service (IaaS) is forecast to experience the highest end-user spending growth in 2023 at 30.9%, followed by platform-as-a-service (PaaS) at 24.1% (see Table 1).

Table 1. Worldwide Public Cloud Services End-User Spending Forecast (Millions of U.S. Dollars)

BPaaS = business process as a service; IaaS = infrastructure as a service; PaaS = platform as a service; SaaS = software as a service
Note: Totals may not add up due to rounding.
Source: Gartner (April 2023)

Gartner predicts that by 2026, 75% of organizations will adopt a digital transformation model predicated on cloud as the fundamental underlying platform. 

“The next phase of IaaS growth will be driven by customer experience, digital and business outcomes and the virtual-first world,” said Nag. “Emerging technologies that help businesses interact more closely and in real time with their customers, such as chatbots and digital twins, are reliant upon cloud infrastructure and platform services to meet growing demands for compute and storage power.”

While cloud infrastructure and platform services are driving the highest spending growth, SaaS remains the largest segment of the cloud market by end-user spending. SaaS spending is projected to grow 17.9% to total $197 billion in 2023.

“The technology substrate of cloud computing is firmly dominated by the hyperscalers, but leadership of the business application layer is more fragmented,” said Nag. “Providers are facing demands to redesign SaaS offerings for increased productivity, leveraging cloud-native capabilities, embedded AI and composability – particularly as budgets are increasingly driven and owned by business technologists. This change will ignite a wave of innovation and replacement in the cloud platform and application markets.”

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