This is down from the previous quarter’s forecast of 8 per cent growth, the Gartner Market Databook 4Q23 Update has reported.
Despite this, Gartner said that IT services will continue to see increased growth in 2024, becoming the largest segment of IT spending for the first time. Spending on IT services is expected to grow 8.7 per cent in 2024, reaching $1.5 trillion.
This is largely due to enterprises investing in organisational efficiency and optimisation projects. These investments will be critical during this current period of economic uncertainty.
“Adoption rates among consumers for devices and communications services plateaued over a decade ago,” said John-David Lovelock, distinguished VP analyst at Gartner. “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.
“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.”
Gartner said that the overall IT spending growth rate for 2023 was 3.3 per cent, only a 0.3 per cent increase on 2022. This was mainly down to change fatigue among CIOs. However, Gartner added that momentum will regain in 2024, with overall IT spending increasing 6.8 per cent.
Even with the expected regained momentum in 2024, however, Gartner said that 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 also require higher levels of risk mitigation and greater certainty of outcomes, said Gartner.
Gartner also concluded that although generative AI had attracted significant hype in 2023, it will not significantly change the growth of IT spending in the near-term.
“While GenAI will change everything, it won’t impact IT spending significantly, similar to IoT, blockchain and other big trends we have experienced,” said Lovelock. “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.”