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April 17, 2024

Global IT spending set to rise by 8% in 2024

Much of the growth in global IT spending will be fuelled by increased demand for consultancy services and data centre capacity as generative AI services take root.

By Greg Noone

Global IT spending will increase by 8% to $5.06trn in 2024, says Gartner. Such an increase in global IT spending would surpass last year’s market growth of 6.8%, which itself was only 0.3% higher than in 2022. Much of this year’s growth, predicts the research agency, will be fuelled by greater spending on data centre systems and software (10% and 13.9% respectively) by companies as they deploy more generative AI systems throughout their business, as well as on partnerships with consultancies to advise on where and how that money is best allocated. 

“Enterprises are quickly falling behind IT service firms in terms of attracting talent with key IT skill sets,” wrote John-David Lovelock, a distinguished VP analyst at the research organisation and the author of its latest update on the state of the IT market. “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.”

A line graph, used to illustrate a story about global IT spending rising in 2024.
Global IT spending will rise thanks in large part to increased demand for generative AI services, Gartner predicts. (Photo by Shutterstock)

Global IT spending rise disconnected from state of economy

The growing popularity of generative AI is one of the main reasons why global IT spending in 2024 is set to surpass previous years, Lovelock told Tech Monitor, with many firms now moving on from experimenting with the technology and now beginning to deploy it in discrete areas of their business. It’s part and parcel, explains the analyst, of an association among firms of greater investment in IT with the creation of new efficiencies – a stereotype that remains largely disconnected from the torpid state of the global economy. “IT,” says Lovelock, “is still seen as an engine that will grow the company and allow [it] to meet its goals around efficiency, effectiveness, and cost-saving.”

2024 will also be the first year when spending on consultancies to advise on technology deployments will outmatch the sum spent on hiring dedicated IT staff to do the same thing, among other tasks. This trend is partly driven, explains Lovelock, by a gradual movement of skilled IT professionals to technology firms, making it harder for CIOs in other sectors to attract talent that could easily oversee new software deployments. “People ask, ‘Is this the tipping point?’” says the analyst. “The tipping point was two years ago when this became a problem that was not being solved.”

Generative AI still locked in hype cycle

Spending on data centres will also increase throughout 2024, predicts Lovelock, as demand grows for space in server racks to support new generative AI application deployments. Most of this growth will be fuelled by technology firms as they rush to develop and release new large language models (LLMs.) It will be a while, says Lovelock, before the fruits of this labour create a standardised market for generative AI outputs. “Enterprises do not yet have a product, service or offering that they can spend massive amounts of money on,” the analyst adds.  

This, argues Lovelock, is a “picks and pans” phenomenon, referring to the historical rise in spending on the tools of the trade that accompanied the gold rushes of the 19th century. It is also in keeping, he adds, with Gartner’s prediction last year that generative AI remains at the peak of its so-called ‘hype cycle,’ wherein expectations surrounding the technology outmatch its practical usefulness, to be followed by a ‘trough of disillusionment’ when the wider market begins to agree with that assessment. 

“It’s the fastest technology Gartner has ever seen to get to this level of hype,” says Lovelock. “As a corollary, it’s likely to be the fastest technology to get to the trough and the fastest technology to get out of the trough.” 

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Read more: ‘CIO change fatigue’ constrained IT spending in 2023

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