Global IT Spending Forecast To Grow 8 Percent In 2024, Solution Providers Weigh In On Economy
Gartner is expecting worldwide IT spending to increase 8 percent in 2024 to $5.1 trillion. Here are solution providers’ 2024 economic predictions.
The largest tech markets in 2024 will be IT services at $1.55 trillion, communication services at nearly $1.5 trillion, followed by software spending at approximately $1 trillion. Spending on cloud computing, as well as cloud vendor price increases, will lead to the fastest area of spending growth in software and IT services, Gartner said.
Cybersecurity will also drive growth in the software segment as artificial intelligence is creating new security concerns.
“AI has created a new security scare for organizations,” said John-David Lovelock, vice president and distinguished analyst at Gartner, in a statement. “Gartner is projecting double-digit growth across all segments of enterprise security spending for 2024.”
Partners Weigh-In On 2024 Economy
John Teltsch, CRO at Converged Technology Solutions (CTS), a global Toronto-based solution provider, said he is expecting revenue to increase in line with Gartner’s growth rate in 2024.
“Our economic outlook in North America continues to be high-single-digit organic growth,” said CTS’ CRO. “In Europe, it’s probably mid-single -digit, year-to-year growth.”
CTS is a major M&A channel consolidator, acquiring over 35 companies since 2016. However, the company stopped making acquisitions in 2023 due to work on the integration of the dozens of companies it has acquired over the years. That could possibly change in 2024 as CTS predicts growth in its largest market of North America.
“We continue to maintain that we’ll look at very, very focused plug-in acquisitions in North America,” Teltsch said. “We think it’s going to be a positive year.”
Manak Ahluwalia, president and CEO of Aqueduct Technologies, said his company is “cautiously optimistic” about the IT economy in 2024 and is predicting growth.
“Most pundits like to talk more doom and gloom. But from a macroeconomic perspective, technology allows organizations to be more efficient. Technology also allows them to be more productive and get to better routes to market and drive better margins,” said Ahluwalia. “So when there is an economic drop-off, we don’t typically see it being technology that is the most vastly impacted. Though, we could potentially see a slowdown in some specific spend.”
Subscription Software Model ‘Softens’ Any Economic Downturn
With the tech industry’s shift over the past few years to software subscriptions and an as-a-service sales motion, solution providers say any economic downturn can be somewhat softened.
“The nature of it over the last couple of years’ shift into more of a subscription software annuity model will probably soften some of the blow if the economy [slows down],” said Ahluwalia. “But obviously, we’re carefully monitoring where customers might be pulling back on spend. We know money is a lot more expensive to borrow.”
Phil Godwin, CEO of Clear Technologies, said selling Software as a Service is “nice to have” as it provides predictable revenue.
“We are still seeing the spend [in SaaS]. But we are seeing some people start to pull back and say, ‘Hey, budgets are affecting things. We’re seeing budget cuts,’” said Godwin. “I probably have a more optimistic view for us than a lot of the economists do. … From our standpoint, we’re still seeing good growth in the server business, storage, and we’re growing our security business.
“There are things that are going to be economy-proof, and there are going to be things that are going to be affected. We have to be logical and reasonable,” he added.
Gartner’s Worldwide Spending Predictions For 2024
The five major markets of devices, data center systems, software, IT services and communication services are all expected to grow in 2024, according to Gartner data.
Spending on data center systems is expected to grow from $237 billion this year to $260 billion in 2024, up 9.5 percent annually.
The devices market is expected to reach $722 billion in 2024, up 5 percent compared with $689 billion this year.
Worldwide spending on software is projected to increase from $916 billion in 2023 to $1.04 trillion next year, representing an annual increase of nearly 14 percent. Software will see the highest increase of spending next year, Gartner said.
The global communications services market is predicted to increase to $1.5 trillion in 2024, up from $1.45 trillion this year, representing modest 3 percent year-over-year growth.
Gartner predicts the largest tech market next year will be around IT services. Global spending on IT services is exprected to reach approximately $1.55 trillion in 2024, up more than 10 percent compared with $1.4 trillion in 2023.