GenAI affecting IT spending across all sectors as Gartner forecasts 7.5 per cent growth

IT spending is projected to reach over $5tr in 2024 according to the research institute

Gartner's latest forecast for worldwide IT spending projects a total of $5.26tr in 2024, marking a 7.5 per cent increase from 2023.

This figure represents a slight decrease from the previous quarter's forecast of eight per cent growth but still indicates an overall increase in spending.

John-David Lovelock, distinguished VP analyst at Gartner, highlighted the pervasive influence of Generative AI (GenAI) across all technology segments.

"GenAI is being felt across all technology segments and subsegments, but not to everyone's benefit," Lovelock stated.

He noted that while some software spending increases are attributable to GenAI, it often acts as a "tax" for software companies, with revenue from GenAI add-ons or tokens flowing back to AI model provider partners.

The datacentre systems sector is experiencing a significant boom, with spending expected to surge by 24 per cent in 2024, more than double the previous forecast of ten per cent growth.

This dramatic increase is largely attributed to the growing demands of GenAI implementation, he said.

"The compute power needs of GenAI are being felt across the datacentre, and spending in that segment reflects this ravenous demand," Lovelock explained.

However, the IT services sector has seen a downward revision in its growth forecast, now projected at 7.1 per cent for 2024, down from the earlier prediction of 9.7 per cent.

This adjustment is partly due to slower spending in consulting and business process services subsegments, Gartner research found.

Lovelock also addressed the issue of "change fatigue" among CIOs, noting that while it has abated since the start of the year, its effects lasted longer than expected.

He anticipated a rush of activity towards the end of the year to compensate for the slow start, as contract backlogs from late 2023 are being cleared.

The forecast encompasses various IT segments, including datacentre systems, devices, software, IT services, and communications services. While all sectors are expected to see growth, the impact of GenAI is creating both opportunities and challenges across the industry.