IT spending is projected to grow significantly in 2024. In fact, according to Gartner’s most recent global IT forecast, it’s predicted to increase to $5.1 trillion worldwide in 2024, up 8% compared to 2023 levels. Moreover, software spending is slated to grow to 13.8%, and IT services are forecasted to increase to 10.4% year over year.
Why it matters: Researchers claim that increased cloud spending is largely responsible for the projected uptick in costs for IT services and software. Additionally, inflation, paired with cloud vendor price hikes, is set to contribute to the boost in global spending on public cloud services in the coming year.
- The Producer Price Index (PPI) recently illustrated a 3.1% year-over-year price increase for data processing, hosting, and related services, all areas in which cloud serves as a key contributor. The rise in cloud pricing can be attributed to higher energy demands, new generative AI services, and increased wages, among other factors.
- Hardware dropped according to the PPI, which showed a year-over-year decrease of 2.7%. Additionally, host computers and servers experienced a 2.3% decrease. However, the professional services category soared above the rest, with the PPI reporting an 8.5% year-over-year price rise.
- Generative AI, although it’s been all the rage in 2023, “has not yet had a material impact on IT spending,” according to Gartner’s forecast. The company instead predicts that generative AI will become a much greater part of CIOs’ IT budgets around the start of 2025. Some organizations, however, such as IBM and Capgemini, predict a much greater demand from clients in the space.