GenAI will not significantly change the growth of IT spending in near-term

• IT spending will be driven by more traditional forces, such as profitability, labour, and dragged down by a continued wave of change fatigue.
• Worldwide IT spending expected to grow by 6.8% to reach $5tr in 2024.
• Spending on IT services to surpass communications services for the first time this year and become the largest segment of the spending.

Even though generative AI (GenAI) will gain traction in 2024, it won’t impact IT spending significantly, similar to IoT, blockchain and other big trends the world has seen.

GenAI had significant hype in 2023 but it will not significantly change the growth of IT spending in the near-term, John-David Lovelock, Distinguished VP Analyst at Gartner.

“2024 will be the year when organisations actually invest in planning for how to use GenAI, however IT spending will be driven by more traditional forces, such as profitability, labour, and dragged down by a continued wave of change fatigue.”

According to the research firm Gartner, worldwide IT spending is expected to grow by 6.8 per cent to reach $5 trillion in 2024, from $4.7 trillion in 2023.

However, spending on IT services to surpass communications services for the first time this year and become the largest segment of the spending.

Spending on IT services is expected to grow 8.7 per cent in 2024, reaching $1.5 trillion, largely due to enterprises investing in organisational efficiency and optimisation projects.

Economic uncertainty

“These investments will be crucial during this period of economic uncertainty,” Lovelock said.

Moreover, he said that adoption rates among consumers for devices and communications services plateaued over a decade ago.

“Consumer spending levels are primarily driven by price changes and replacement cycles, leaving room for only incremental growths, so being surpassed by software and services was inevitable,” he said.

“Enterprises continue to find more uses for technology – IT has moved out of the back office, through the front office and is now revenue producing, until there is a plateau for how and where technology can be used in an enterprise, there cannot be a plateau in enterprise IT spending.”

Change fatigue

Even with the expected regained momentum in 2024, he said the broader IT spending environment remains slightly constrained by change fatigue. 

“Change fatigue could manifest as change resistance — with CIOs hesitating to sign new contracts, commit to long-term initiatives or take on new technology partners. For the new initiatives that do get launched, CIOs require higher levels of risk mitigation and greater certainty of outcomes.”