Tech Industry Outlook for 2025
Key Highlights
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Global IT spending is set to grow 9.3% in 2025, reaching $5.74 trillion, driven by investments in AI, cloud computing, and cybersecurity.
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The IT Services segment will lead the charge, with projected revenue of $1.5 trillion in 2025.
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Generative AI remains a focal point, but its short-term impact may fall short of expectations as businesses focus on supply-side infrastructure.
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Despite macroeconomic challenges, 64% of companies plan to increase their IT budgets in 2025, reflecting growing reliance on tech for innovation and operational resilience.
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European IT spending is forecast to grow by 8.7% in 2025, reaching $1.28 trillion, with software leading at a 13.2% growth rate.
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Security concerns are the top driver of IT budget growth.
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Cost-saving measures remain prevalent, with 92% of companies implementing strategies like decommissioning redundant infrastructure, adopting automation, or renegotiating vendor contracts.
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9 AI trends to watch in 2025: synthetic data, automated insights, real-time data, data trading markets, behavioral data as the new gold, automation, micro LLMs, A2A adaptation, and generative AI revolutionizing government.
Market Overview for 2025
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The tech industry in 2025 is poised for substantial growth, with global IT spending projected to reach $5.74 trillion, marking a 9.3% increase from 2024.

Revenue growth is projected across all IT segments, with IT services leading the way at $1.5 trillion in 2025. Within this segment, IT outsourcing emerges as a key growth driver, reflecting the increasing reliance on third-party expertise to enhance efficiency and reduce operational complexity (Figure 1).​​

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​What drives Tech spending and investments?
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2025 will see substantial investments in:
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Generative AI (GenAI): A cornerstone of IT spending, though its transformative potential may take longer to materialize. Investments are primarily focused on creating the supply-side infrastructure necessary for seamless integration.
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Cybersecurity: As cyber threats evolve, businesses are prioritizing robust security measures to safeguard operations.
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Cloud Computing: The demand for scalable and flexible IT infrastructure continues to accelerate.
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Figure 2 provides a comprehensive view of the factors influencing IT services growth in 2025:
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Development of AI (+12.4%)
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Digital Transformation (+4.6%)
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Economic Growth (+3.0%)
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Cloud IT Infrastructure (+2.7%)
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Tech Layoffs (-6.9%)
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Geopolitical Tensions (-1.5%)
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Tech spending trends in 2025
Another study involving 803 IT professionals from North America and Europe highlights this upward trend: nearly two-thirds (64%) of companies plan to increase their IT budgets in 2025, with only 4% anticipating reductions. The remaining 33% expect flat year-over-year spending (Figure 4)

While the proportion of organizations planning to increase IT budgets remains strong, a slight decrease of 2% compared to 2024 indicates a maturing approach to technology investments. Businesses are becoming more strategic, prioritizing areas with clear, measurable returns.
Encouragingly, data from various sources suggest the same: overall IT spending is forecasted to grow by 9% between 2024 and 2025, a notable improvement from the 6% growth recorded between 2023 and 2024. This signals recovering confidence and highlights the important role of IT investments in ensuring business continuity and fostering long-term transformation.

How does business confidence look like and why does it matter for tech vendors?
Business confidence is a vital indicator of how companies perceive economic conditions and their willingness to invest in technology. In 2025, business confidence presents a mixed picture. The optimistic outlook for IT spending aligns with broader trends in business confidence, presenting both opportunities and challenges for tech vendors. However, the gap between regions, particularly the EU and the US, reveals critical differences in market dynamics that vendors must navigate strategically.
In the European Union:
Business confidence rose slightly in November 2024, improving from -11.70 points in October to -10.40 points. While this upward shift reflects some resilience, the EU remains in negative territory, indicating cautiousness among businesses. Forecasts suggest confidence could dip further to -13.00 points by the end of the quarter. This persistent uncertainty highlights a fragile economic environment where businesses are more likely to focus on cost-efficiency and proven ROI over ambitious innovations.
In the United States:
Conversely, the US presents a markedly different picture. Business confidence climbed to 48.40 points in November, up from 46.50 in October, reflecting a stronger willingness to invest despite ongoing challenges. Improvements in key manufacturing metrics, such as new orders and production, indicate a readiness to embrace growth and innovation in 2025. This divergence underscores a more robust economic sentiment, creating fertile ground for tech vendors to position cutting-edge solutions.
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What are the key IT investment trends in Europe in 2025?
The European IT market is entering a transformative phase, with spending projected to reach $1.28 trillion in 2025—an 8.7% increase from 2024. This robust growth is fueled by rising demand for advanced technologies, including GenAI, cloud computing, and cybersecurity solutions. As companies prioritize modernization and innovation, Europe is poised to experience its highest IT spending growth rate since the post-pandemic
surge in 2021.


Why are companies increasing IT budgets
in 2025?
Research highlights security concerns as the primary driver of IT budget growth, with 53% of organizations citing it as a top priority. This marks a steady increase from 41% in 2023 and 48% in 2024, reflecting the evolving landscape of cyber threats (Figure 5). Companies are allocating significant resources to safeguard operations and data, ensuring resilience in an increasingly digital world.

The allocation of IT budgets in 2025 reflects strategic priorities across key categories, with hardware and software each accounting for 19% of total spending, followed by cloud (15%) and IT labor (13%). Within these areas, companies are focusing on (Figure 6).

Why do companies implement IT
cost savings?
Despite overall budget increases, 92% of companies plan to implement some form of cost-saving measures in 2025, averaging four measures per organization (Figure 7). These strategies often involve clearing out outdated systems to make way for new technologies.


Insights into the purchasing behavior in 2025
IT spending trends highlight significant variations across industries, with some sectors showing robust growth while others take a more cautious approach.
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IT Services and Software: Leading the charge, 72% of organizations in these sectors plan to increase their IT budgets between 2024 and 2025. This reflects their ongoing commitment to innovation and infrastructure development.
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Construction and Manufacturing: Both industries exhibit a promising outlook, with 68% of construction companies and 68% of manufacturers planning budget increases, although 2% of manufacturers expect reductions
IT budget growth for 2025 varies significantly across sectors, with a median growth of 5% across all industries. However, standout performers and lagging sectors reveal deeper trends (Table 2)

What Are Tech Customers Looking For?
In 2025, tech customers prioritize solutions that directly align with their operational goals and address pressing challenges. Key focus areas include:
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Scalable Infrastructure: Businesses continue to favor cloud computing for its flexibility and scalability, enabling them to adapt to dynamic market conditions.
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Robust Cybersecurity: With data breaches on the rise, investments in advanced security solutions remain a top priority.
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Operational Resilience: Tools that enhance adaptability to market shifts are in high demand, helping organizations navigate uncertainties.

Organizations are most likely to switch vendors for two primary reasons: significant cost savings and superior product or service quality.

What are the most important technologies for companies?
AI remains the cornerstone of technological advancement in 2025, followed by renewable energy and robotics. Key trends include (Figure 9):
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Widely Adopted Technologies: A significant share of organizations currently use 5G (54%), open-source software (51%), and IT automation (50%). IoT devices (47%) and Gigabit Wi-Fi (44%) also enjoy widespread adoption.
