European ICT spend increasing despite recession fears
Information and communication technology (ICT) spending in Europe will reach $1.2 trillion in 2023 despite economic downturn and worries about recession. By 2026, it will surpass $1.4 trillion, posting a 5.4% compound annual growth rate (CAGR) over the 2021-2026 period, market intelligence firm International Data Corporation (IDC) forecasts.
European spending will grow by 4.2% year on year in 2023, driven by the Scandinavian countries and the United Kingdom, IDC says.
“On the other hand, sanctions imposed by the EU and the growing number of companies leaving Russia will result in the Russian ICT market shrinking by 9.4% year on year.”
“While organizations in most countries are anticipating a recession this year, the outlook for European ICT spending remains positive,” says Zsolt Simon, Senior Research Analyst at IDC. “They regard technology investments as a means of gaining a competitive edge, as well as providing solutions for many of the challenges arising in an extremely volatile market.”
IDC predicts software will be the fastest-growing technology group on a year-on-year basis, and investments in cloud-first solutions will drive the overall technology market in Europe in 2023. “Software has proven to be highly resilient to the storm of disruptions currently impacting the continent, supported by rapid growth in the adoption of artificial intelligence (AI) platforms and software quality and lifecycle tools, as well as application platforms, integration and orchestration middleware, and collaborative applications.”
“Despite inflationary pressures and economic recession in several European countries, investments in IT and business services, telecom services, and hardware will continue to increase as well.” “However, the device market has suffered from the declining purchasing power of consumers, supply chain constraints, and cost-saving measures among enterprises, which is expected to result in an overall decline in device spending of 2.2% in 2023.”
IDC says the consumer sector will continue to be the largest source of ICT spending in 2025, representing almost 28% of total European ICT revenue, although year-on-year growth will remain below 1%, as the increasing cost of living is taking a toll on consumer purchases.
“Banking and discrete manufacturing will take the second and third positions, respectively, in the ranking of highest spending industries, accounting for a combined market value of over $210 billion.”
- Entities in the banking sector will be focusing on accelerating automation to support core banking services, database management, and resource management.
- AI will be leveraged to offer more flexible and more personalized services for improved customer experiences.
- Manufacturing companies will invest in technologies to ensure cost-effective operations, handle increasing amount of data, and reduce pressure on staff through robotics and process automation robotic process automation (RPA).
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