Worldwide IT spending is expected to total $5 trillion in 2024, an increase of 6.8% from 2023, according to the latest forecast by Gartner. Despite the hype, the firm says that generative AI (GenAI) will not significantly change the growth of IT spending in the near-term.

► Spending on IT services to surpass that on comms services for the first time

► GenAI won’t have major direct impact on spending this year

► ‘Change fatigue’ could restrain growth to some extent

IT services will continue to see an increase in growth in 2024, becoming the largest segment (at around 30%) of IT spending for the first time. Spending on IT services is expected to grow 8.7% in 2024, reaching $1.5 trillion (see Table 1). This is largely due to enterprises investing in organisational efficiency and optimisation projects, said Gartner, adding that these investments will be crucial during this period of economic uncertainty.

John-David Lovelock, distinguished VP analyst at Gartner, said that while consumer uptake of technology and comms services has reached a glass ceiling, that’s yet to happen in the business market where software and services are more prevalent.

‘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.’

While AI is a big factor, Lovelock said it is not going to move the needle too much on overall spending – at least not this year.

‘While GenAI will change everything, it won’t impact IT spending significantly, similar to IoT, blockchain and other big trends we have experienced. 2024 will be the year when organisations actually invest in planning for how to use GenAI, however IT spending will be driven by more traditional forces, such as profitability, labour, and dragged down by a continued wave of change fatigue.’

Even with the expected regained momentum in 2024, the broader IT spending environment remains slightly constrained by change fatigue, said the firm. This 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 will require higher levels of risk mitigation and greater certainty of outcomes.

Table 1. Worldwide IT Spending Forecast (Millions of U.S. Dollars)

Source: Gartner (January 2024)