Tech Industry Outlook for 2024
Key Highlights
-
Global IT spending for 2024 is expected to hit $5.1 trillion, reflecting an 8.8% growth compared to 2023.
-
By 2024, IT spending in Europe is expected to reach $1.1 trillion, representing a 9.3% increase from the previous year.
-
In IT projects, organizations are strategically prioritizing cost management, process optimization, and automation, while reducing emphasis on initiatives with extended returns.
-
The software and IT services segments are set for an eye-catching double-digit growth.
-
87% of businesses are considering a switch in IT vendors.
-
63% of senior tech leaders perceive it as challenging to hire individuals with the necessary IT skills.
Market Overview for 2024
-
A positive outlook with global IT spending projected to reach $5.1 trillion, marking an 8.8% increase.
-
73% of companies anticipate a positive financial outlook, with only 8% expecting a revenue decrease.
-
Significant increase in technology investments, particularly among large companies.
Key Investment Areas in Technology:
-
Focus on investments primarily in software, IT services, data center systems, devices, and communication services.
Strategic Technology Investments:
-
Viewing technology as a long-term investment rather than just an expense.
-
Addressing challenges such as hesitations among CIOs due to profitability concerns and limited funds.
Funding Landscape for Start-ups:
-
Addressing current challenges in securing funding, especially in the early stages.
-
Observing a decline in early-stage and seed funding, emphasizing the need for efficient cost management and growth planning.
Demand Analysis & Market Understanding:
-
Essential factors like purchasing power, customer base size, specific needs, and reservation prices.
-
The importance of a deep understanding of market demand to optimize profits and meet customer needs.
IT budget structure in 2024
The projected spending growth rates for the year indicate a substantial increase in the software segment at 14.1%, data center systems at 8.1%, devices at 6.9%, communication services at 3.8%, and a booming growth rate of 11.6% for the IT services sector.
The survey identifies key areas for future investment in 2024, with cybersecurity, data analytics, and cloud platforms standing out as the top priorities for CIOs (Figure 3).
In 2024, the spotlight is on data security paired with growing data visualization. The global business intelligence market, valued at $27.11 billion in 2022, is forecasted to grow from $29.42 billion in 2023 to $54.27 billion by 2030.
According to an IDC prediction, organizations equipped with efficient BI tools and technologies will have a serious advantage by 2024, boasting five times faster reaction times to take advantage of new opportunities.
According to Gartner's latest forecast, global end-user spending on public cloud services is expected to grow by 20.4%, reaching $678.8 billion in 2024, up from $563.6 billion in 2023. This growth is attributed to the changing business requirements and the emergence of transformative technologies such as GenAI.
As companies adopt GenAI services, they tend to rely on public cloud infrastructure for its scalability. Also, the rise of AI has led many organizations to use multiple cloud providers to meet their diverse workloads.
Tech spending trends: insights into the purchasing behavior
How can you increase your customers' conversion rate? The answer to this question is more complex, but undoubtedly, understanding your target audience's purchasing behavior and decision-making process is one of the key factors that will boost your conversion rate drastically.
A recent study involving 883 IT professionals from companies in North America and Europe has revealed that 74% of respondents have changed their tech purchasing behavior. These changes include:
-
Reducing the number of seats;
-
Delaying purchases;
-
Consolidating technologies;
-
Re-evaluating vendors or contracts;
-
Adopting more cost-effective or free services;
-
Or decommissioning unnecessary infrastructure.
The study has also found that 87% of businesses are considering switching to new IT vendors, which presents both challenges and opportunities for tech vendors. Also, 78% of tech buyers prefer engaging directly with product experts from vendors before making IT solution purchases (Figure 4).
Among those organizations that are open to changing technology vendors, they tend to switch both software and hardware providers.
These organizations prioritize five crucial factors when selecting vendors for products and services, as illustrated in Figure 5, during the decision-making process.
An increasing number of companies acknowledge the importance of investing in IT, primarily influenced by two key factors: the necessity to update infrastructure and a heightened prioritization of IT projects (Figure 6).
IT personnel prioritize different types of information during the purchasing process. Transparent pricing information is the most important, followed by detailed product and technical specifications, as well as product demonstrations.
In the near future, the decision-making process for purchasing tech products and services will be highly influenced by AI solutions. Below, we will discuss some of the key predictions regarding the role of AI in the tech industry.
The paradox of AI and the tech industry
The use of AI is increasing rapidly and it appears to be involved in almost everything from layoffs to decision-making and product development. However, the exact impact of AI on the future is still uncertain.
According to John-David Lovelock, from a corporate perspective, there will be minimal association between IT spending and GenAI in 2023 and 2024. Despite this, businesses continue to invest in AI and automation to improve operational efficiency and bridge the gaps in IT talent.
According to the latest layoffs report from outplacement firm Challenger, Gray & Christmas, 3,900 people were laid off in May specifically due to Artificial Intelligence (AI). This marks the first time the firm has distinguished job cuts based on the impact of AI. Remarkably, all of these cuts occurred within the tech sector.
Advanced AI capabilities raise critical questions about their impact on jobs in the tech industry.
Currently, there is a paradox in the relationship between AI and the tech sector. While some organizations are laying off employees, many others are planning to expand their workforce in 2024. However, attracting skilled tech workers is a challenge, especially since there is currently a shortage of IT labor. Most senior leaders are finding it difficult to hire qualified IT talent. To address this gap and adapt to new workplace realities, more organizations are adopting emerging technologies like AI and implementing zero trust security solutions. Despite the expectation of growth in IT hiring, 63% of senior tech leaders perceive it as challenging to find individuals with the necessary IT skills.
It is estimated that by 2025, AI will be the primary category influencing infrastructure decisions. This change is due to the maturation of the AI market, resulting in a tenfold increase in compute requirements. Also, AI played an important role in technology-related business decisions in 2022. This highlights the strong impact of AI on the technology sector, affecting both employees and business automation.
