Gartner: IT Spending To Grow Faster Than Expected In 2024

April 22, 2024 Timothy Prickett Morgan

The adoption of generative AI by enterprises and the acceleration of the rates of use of IT services from outside consultants to get stuff done is going to boost IT spending higher than expected this year, according to the prognosticators at Gartner.

In terms of aggregate dollars, the effect if the latter is much larger than the former. The broad IT services category is now expected to account for $1,520 billion in spending worldwide this year, up 9.7 percent compared to last year and representing a $19 billion increase from the forecast that Gartner made in January. It will not be long, in fact, before IT services is a larger piece of global IT spending than telecom services, which will be a first.

“This category is on pace to become the largest market that Gartner tracks,” John-David Lovelock, distinguished vice president analyst at Gartner, said in a statement accompanying the forecast. “Enterprises are quickly falling behind IT service firms in terms of attracting talent with key IT skill sets. This creates a greater need for investment in consulting spend compared to internal staff. We are at an inflection year for this trend, with more money being spent on consulting than internal staff for the first time.”

This is the first time we had any idea from Gartner’s public statements what the global spending on internal IT staff was. Now we know. Somewhere south of $1.5 trillion, but not too far south. Given what we know about skills shortages in the IBM i market and the need to add applications, modernize existing ones (with generative AI and other functions), it will not be strange to see a similar 50-50 split for the people budget at IBM i shops in the long run.

Oddly enough, the forecast for sales of datacenter systems – servers, storage, and networking all lumped together – is down a tiny bit to $259.7 billion, but will still grow at a higher rate of 10 percent compared to 2023 because sales of datacenter systems was dropped by $6.9 billion in 2023 in the rejiggered Gartner numbers.

Spending on enterprise software – all of that systems software, middleware, and application software added together – will rise by 13.9 percent in 2024 in the most recent Gartner auguries, to $1,042 billion.

If you add up datacenter systems, enterprise software, and IT services, you get what we call the core IT market, which does not include spending on smartphones and PCs or telecom services by businesses. This core IT market is now expected to grow at 11.3 percent in 2024, reaching $2,822 billion. That growth in core IT spending is 4.7X faster than the expected growth for global gross domestic product put forth by the World Bank, which is 2.4 percent for 2024.

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