Forrester Research forecasts a 5.3% surge in global tech spending to $4.7 trillion in 2024, citing improved economic conditions and diverse growth opportunities. (IT World Canada)
The tech sector experienced a challenging 2023, grappling with various issues, but a more optimistic outlook is on the horizon for 2024, according to recent findings from Forrester Research.
In contrast to the modest 3.9% growth in overall technology spending witnessed last year, Forrester predicts a brighter picture for 2024. Fueled by improved economic conditions stemming from lower energy costs, alleviated supply constraints, and decreasing inflation, the anticipated growth is expected to reach 5.3%, totalling a substantial US$4.7 trillion.
In a blog post detailing these findings, Michael O’Grady, a forecast analyst, and Michael Kearney, a data researcher, emphasized several reasons for excitement in the tech market this year. Noteworthy factors include the rapid ascent of the Asia Pacific market, a substantial demand for software, the extensive possibilities presented by generative AI, and an increasing emphasis on green and digital innovation.
Forrester advises companies to prioritize long-term growth by investing in technology, specifically highlighting software, generative AI (GenAI), and green and digital innovation. Such investments are deemed essential for enhancing adaptability and resilience, streamlining operations, fostering future growth, and mitigating enterprise risk.
The forecasts for 2024 by Forrester are as follows:
- The software market is expected to grow by 10.5%, with commercial off-the-shelf software revenues seeing an 11.9% increase. Cloud services are anticipated to maintain their robust demand, with Microsoft, Google Cloud, and AWS demonstrating substantial growth in the previous year.
- IT services are projected to grow by four percent, although the outlook is uncertain. Notably, Accenture, despite experiencing double-digit growth in its cloud and security business, saw slower growth in consulting revenues, signaling potential challenges in this sector.
- Computer equipment is anticipated to witness a 3.6% growth. Notably, Microsoft's strategic plans for data centers and servers to support Azure's growth indicate a considerable investment in this area.
To stimulate tech spending growth in 2024, tech firms are expected to concentrate on developing new technology markets, promoting the green economy, fostering digital innovation, reconfiguring chip supply chains, and realizing the return on investment from 5G.
The report also highlights the convergence of the tech market around key themes such as cloud, AI, digital transformation, automation, e-commerce, and digital marketing. Tech vendors are expected to expand their reach into new markets and verticals, particularly in software and IT services, which are anticipated to experience the fastest growth.
However, Forrester paints a slightly less optimistic picture for the Canadian tech market, forecasting that growth will lag behind the U.S. This is attributed to the federal government's plan for a 3.2% reduction in science and technology budgets for 2024.
