European ICT spending is being dominated by software and information services
PRAGUE, Czech Republic (AI Reporter/News): European businesses are poised for a tech spending spree, according to a new report by International Data Corporation (IDC). Their “Worldwide ICT Spending Guide Enterprise and SMB by Industry” predicts ICT spending in Europe will hit a staggering $1.1 trillion in 2024, reaching over $1.3 trillion by 2027. This translates to a healthy growth rate of 5.3% compounded annually over the next five years (2022-2027).
The report highlights software and business services as the driving forces behind this growth. This surge is fueled by the ever-increasing need for tools that enable successful remote collaboration, robust security solutions, and the accelerating adoption of artificial intelligence (AI) across various industries.
Software and information services organizations will continue to invest heavily in cloud solutions and AI tools.
Europe’s Tech Spending: A Tale of Two Speeds
European businesses navigate a mixed economic climate for tech investment. While lingering challenges persist in 2024, a brighter outlook for ICT spending emerges.
Innovation Hubs Lead the Charge: Countries like Sweden, Finland, and Norway boast a strong foundation of software companies. This fuels rapid growth in their ICT markets, positioning them as hubs for digital innovation.
Romania Faces Headwinds: High inflation presents a hurdle for Romania’s ICT sector. The declining market value of devices leads to a slight dip in overall spending, highlighting the impact of economic factors.
This scenario underscores the importance of a robust software and IT infrastructure for sustained growth.
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Europe: Cautious Optimism for Tech Spending Despite Uncertainty
Despite lingering economic concerns, European businesses are expected to maintain, and even increase, their investments in technology. This insight comes from Zsolt Simon, senior research analyst at IDC Europe.
Uncertainty Persists: Although inflation and energy prices are easing, geopolitical tensions and a general economic slowdown will continue to create a cautious environment throughout 2024.
Tech Investments Remain a Priority: Despite these challenges, Simon emphasizes that information and communication technology (ICT) spending will show growth across all industries. Businesses recognize the importance of technology for navigating a complex economic landscape.
Software & AI Lead the Way: The software and information services sector is poised for particularly strong growth. Advancements in generative AI, a powerful form of AI, are expected to be a key driver of spending in the coming years.
This outlook suggests that European businesses are adopting a strategic approach.
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Key Commercial Sectors Drive European ICT Spending Surge
Europe’s commercial sector is poised for a significant rise in information and communications technology (ICT) spending in 2024. Here are the key takeaways:
Strong Growth in Key Industries: Three industries are leading the charge – oil & gas, software and information services, and healthcare payers. Combined, they’re expected to see a remarkable year-on-year spending increase of 9%, exceeding the overall B2B ICT spending growth rate of 6.6%.
Energy Sector Transformation: The oil & gas industry, specifically, is emerging as a major driver of ICT spending growth. This surge is fueled by two key factors:
Diversification of Energy Sources: As Europe strives for a more sustainable energy mix, companies are investing in technologies to integrate renewable energy sources into their operations.
Environmental and Sustainability Compliance: Stricter regulations necessitate upgrades in digital capabilities to ensure compliance and environmental responsibility.
This trend highlights the increasing importance of technology across various industries.
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Software & Healthcare Lead Europe’s Digital Transformation
The software and information services industry is emerging as a major force behind Europe’s ICT spending boom.
Here’s why:
Cloud & AI Drive Growth: Software companies are heavily investing in cloud solutions and AI tools. This includes the adoption of generative AI (GenAI) in various areas like chatbots, language processing, and coding.
Empowering Software Solutions: The advancements in GenAI will further fuel investments in software solutions like customer relationship management (CRM) applications and collaborative tools. These advancements allow companies to automate tasks, improve efficiency, and deliver a better customer experience.
Healthcare Payers Embrace Tech: While the healthcare payer industry might be smaller in terms of total spending, it’s expected to see impressive ICT spending growth through 2027. This investment will build upon existing advancements in health insurance systems, allowing for safer, more flexible, and reliable services for their clients.
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