Global tech spending expected to keep climbing on AI demand
Companies worldwide are expected to spend 5.3% more on technology this year, fueled by higher investment in software and IT services, including generative artificial intelligence (GenAI). Businesses, though, will remain largely unprepared for the impact of AI.
Global tech spending will climb at a higher 5.3% growth this year compared to 3.5% in 2023, to hit $4.7 trillion, according to research and advisory firm Forrester. The higher expenditure will be driven by demand for software and IT services such as AI, cloud, and security, which collectively will grab 69% of overall tech spend by 2027.
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Investments in GenAI software alone are expected to exceed $227 billion by 2030 on a 36% compound annual growth rate, Forrester said.
Apart from robust demand for software and IT services, another key driver of this year's global tech spend is Asia-Pacific, the research firm said.
The region, in fact, will see the highest growth in tech spending at 5.7%, followed by North America at 5.4% and Europe at 5.1%, Forrester said. IT exports by India, one of the world's biggest exporters of technology services, are estimated to hit $194 billion in 2023, while the nation's overall technology and services market will rake in revenue worth $350 billion by 2025.
India is among several Asian markets that will see the highest growth rates in tech spending this year, with the Philippines, Vietnam, Indonesia, and China also joining the club.
In North America, 60% of tech spending will go toward software and IT services in 2027, compared to 53% in 2018. The fastest overall tech spend will come from the financial services and healthcare sectors, according to Forrester.
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It added that the European economy will recover this year at almost double the rate of 2023, and is expected to see tech spend growth between 5.1% and 5.7% between 2024 and 2027. This will be fueled by higher digital maturity among businesses and more advanced cybersecurity adoption, Forrester said.
Enterprise adoption of AI, though, will come with some uncertainty, according to research from Kearney and Egon Zehnder. The consultancy and leadership advisory firms surveyed 100 executives across four countries.
The study revealed that 70% believed their organization will be disrupted by AI over the next five years, but just 21% agree it has the necessary capabilities to deal with the disruption. The technology's rapid growth is a key factor, with 73% citing time, people, and money as limitations in their level of readiness.
Some 51% pointed to their leadership team's lack of understanding in AI as a challenge. In comparison, among those who believed their organization is prepared for AI, 89% pointed to their business leaders' understanding of AI and its capabilities as a contributing factor.
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The study noted that 85% saw AI as an opportunity for their company and 95% perceived the technology as an opportunity for their personal roles.
To prepare for AI, 49% said they are investing in infrastructure, while 44% are turning to external partnerships and 39% are hiring experts in the field.
"The prevailing sentiment among leaders when it comes to AI is optimism. The challenge now lies in translating this optimism into tangible action," said Arjun Sethi, Kearney's Asia-Pacific head and chairman.