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European IT spending forecasted to grow 9.3% next year

IT spending in Europe will total $1.1 trillion in 2024, an increase of 9.3% from 2023. IT spending in Europe is on pace to surpass $1 trillion by the end of 2023, according to a forecast by market research firm Gartner. Software and IT services are the two segments where CIOs in Europe are expected to increase their spending the most in 2024. 

“Despite a conflated economic situation, IT spending in Europe continues to be recession-proof,” says John-David Lovelock, VP Analyst at Gartner. 

“CIOs in Europe who pursued the “growth at all costs” strategy for over a decade, are now shifting the emphasis of ongoing IT projects toward cost control, efficiencies and automation, while curtailing IT initiatives with longer ROIs.”

The forecast says that although artificial intelligence (AI) is a priority for CIOs this year and next, it is not yet a spending priority. 

“There are other factors such as revenue generation, profitability and security fueling IT spending in Europe next year.” 

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“Maintaining a healthy profit margin has become pivotal for European corporations and this has ushered in a new wave of pragmatism,” said Lovelock.

The forecast says that while there is sufficient spending within data center markets to maintain the existing on-premises data centers, new spending continues to skew toward cloud options (including infrastructure as a service [IaaS]), which is expected to grow 27% in Europe in 2024. 

“CIOs in Europe are also shifting their priorities internally, including enhancing cybersecurity spending in the cloud and planning for AI and generative AI.

“AI has also added a new level of concern around security ensuring that their systems are wrapped before hackers get near their sensitive data,” says Lovelock. 

Gartner forecasts spending on security and risk management in Europe to reach an estimated $56 billion in 2024, a 16% increase from 2023.

Some of the growth in IT services is due to talent shortages in IT departments in Europe. “There is a migration of IT skills away from the enterprise IT department toward technology and service providers (TSPs),” said Lovelock. “CIOs do not have the employees nor the talents to do all the work required and turn to IT services firms to fill in the gaps.”

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Inflation continues to impact consumer purchasing power, and while businesses and consumers are expected to increase their spending on devices in 2024, the level of IT spending on devices is not estimated to go back to 2021 levels until 2027. 

In Europe, Austria, Ireland and Finland are projected to record the biggest bounce back in consumer spending in 2024.

The top three most mature countries in Europe will represent 51% of total IT spending in Europe in 2024. IT spending in the UK., Germany and France is projected to total $588 billion in 2024, up 9.8% from 2023.

Among the international monetary fund (IMF) developing countries (Hungary and Poland), IT spending is estimated to total $32.3 billion in 2024, up 9.2% from 2023.

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