GenAI, Hiring Crunch Prompt Higher 2024 IT Spending Forecast From Gartner

The Q2 revised forecast gets closer to October’s after a fall in January.

Research firm Gartner has raised its 2024 worldwide IT spending forecast to about $5.06 trillion thanks to a boost in expected spending on communications services – still coming in slightly lower than the $5.07 trillion 2024 forecast published in October.

The Stamford, Conn.-based firm’s 2024 forecast fell to about $5 trillion last quarter after lowering its expected 2024 spending on IT services, software and communications compared to the October forecast. The revised $5.06 trillion forecast would represent an 8 percent growth year over year.

This quarter, an increased estimate in the communications services forecast – higher than Gartner predicted in October – helped the 2024 forecast again surpass $5 trillion. This quarter’s revised forecasted spending on IT services and software grew compared to the January forecast, but the new numbers still fell below the 2024 forecast published in October.

Gartner IT Spending

Although IT services still lagged behind the October estimate, Gartner called IT services “on pace to become the largest market that Gartner tracks.” The firm now predicts $1.52 trillion in IT services spending compared to $1.55 trillion in the October prediction, a change of almost 2 percent.

While IT services was the largest IT spending category in the January and October estimates, this quarter Gartner revised the 2024 communications services forecast to be higher than that of IT services, according to Gartner.

An inability for enterprises to hire workers with IT skills comparable to IT service firms and a planning around generative artificial intelligence (GenAI) are helping to fuel IT spending in 2024, John-David Lovelock, Gartner’s distinguished vice president analyst said in a statement.

“In 2023, enterprises were telling the story of GenAI and in 2024 we are seeing most of them planning for eventual execution in 2025,” Lovelock said. “Technology providers are required to be a step ahead of this cycle and are already in the execution phase. They are bringing GenAI capabilities to existing products and services, as well as to use cases being identified by their enterprise clients.”

AI servers will account for about 60 percent of total server spending by hyperscaler companies, according to the firm. Worldwide IT spending is on track to surpass $8 trillion before the end of the decade.

This quarter’s forecast sets the following expectations for 2024 spending:

Data center systems is now about $260 million, down less than a percent from last quarter’s estimate but still representing 10 percent growth year over year
Devices spending is now expected to reach $690 million, down about 6 percent from last quarter’s estimate but still representing a 3.6 percent increase year over year
Software spending is now expected to reach $1.04 billion, up about 1 percent from last quarter’s estimate and representing a 13.9 percent increase year over year
IT services spending is now expected to reach $1.52 billion, up about 1 percent from last quarter’s estimate but still down almost 2 percent from the October prediction – the latest forecast represents a 9.7 percent increase year over year
Communications is now expected to reach $1.6 billion, up about 5 percent from last quarter’s estimate and representing a 4.3 percent increase year over year

Gartner attributed the growth in devices spending to the shorter average lifespan for mobile phones, with GenAI capabilities sustaining more than driving the change.