Our forecast for enterprise IT spending in 2024 is partly sunny, with a chance of strong headwinds. With stronger-than-expected economic data in the US and Europe and easing inflation, the world economy in most regions looks poised for the soft landing that central banks were aiming for. Our survey shows that IT budgets will continue to grow, and enterprises expect a slightly better year than 2023. The worldwide outlook is cautiously optimistic.
The following figure from our full study, Worldwide IT Spending and Staffing Outlook for 2024, shows the expected median IT operational budget growth for the worldwide sample. IT organizations worldwide expect to increase IT operational budgets by 3.2% at the median in 2024. At the 25th percentile, IT executives anticipate no change in budgets. At the 75th percentile, they expect IT operational budgets to climb a healthy 10.0%. The average increase (not shown in the figure) is 5.2%. This represents an increase slightly above inflation and is in line with increases we have seen for many of the past few years.
However, potential spoilers remain. China’s economic growth has been challenged by an ongoing real estate crisis and other factors, and foreign investors have pulled significant capital from the region. China diversification strategies by Western countries have also impacted China’s growth. A full-blown economic crisis in China could send the still fragile global economy into recession.
Additionally, existing challenges, including conflicts in Ukraine and Gaza, as well as stubborn inflation, could continue to hold the economy back, especially in Europe. And while consumer spending has been strong, especially in the US, consumer debt is also rising to record levels.
The good news for enterprise IT leaders is that regardless of the economic conditions, the path forward for IT is the same. The continued digital transformation of the enterprise is both the remedy for a recession and the smart path in good economic times.
“Gen AI, automation, and cloud are boosting IT efficiency and innovation and enabling IT organizations to be more resilient and adaptive in the face of uncertainty,” said Asif Cassim, principal analyst for Avasant Research, based in Los Angeles. “These technologies are essential for organizations in all sectors to thrive in any economic scenario.”
Digital transformation, combined with the growth of generative AI, is poised to not only make companies more productive but also create new business opportunities and impact revenue growth. As a result, 2024 could emerge as a strong year for the global economy.
It would be remiss if we did not point out that it is highly unlikely that, at any time soon, we will see an unmitigated positive outlook on the economy. If the past few years have taught us anything, it is that the rate of change is faster than ever, and predictions are difficult. Nearly no one predicted the COVID-19 pandemic. And while experts may foresee potential conflict around the world, the timing of these conflicts is still difficult to predict.
To understand the outlook for 2024, our Worldwide IT Spending and Staffing Outlook 2024 assesses enterprise confidence in their organizations’ business outlook, IT budget changes for the year, IT staffing changes, and IT spending priorities, both short and long term.
This Research Byte is a brief overview of our report Worldwide IT Spending and Staffing Outlook 2024. The full report is available at no charge for subscribers, or it may be purchased by non-clients directly from our website (click for pricing).