A new Forrester report forecasts that global technology spending will grow to $4.9 trillion by 2025, marking a 5.6% annual growth rate. The expansion will be driven by software, IT services, artificial intelligence (AI), and cloud computing, with Asia Pacific and North America leading the surge.
Software and IT Services to Dominate Growth
Forrester’s Global Tech Market Forecast, 2024-2029 reveals that software and IT services will account for 66% of total tech spending in 2025. The growth is fueled by:
- Rising cybersecurity investments.
- Modernization of legacy IT infrastructure.
- Greater adoption of AI-driven automation and cloud solutions.
Software alone is expected to grow at 10.5% annually, contributing to 60% of total tech spending growth by 2029.
AI and Cloud Investments to Reshape Industries
The report emphasizes that AI-driven investments will accelerate digital transformation in financial services, retail, media, and manufacturing. Generative AI adoption is expected to enhance customer engagement, automate processes, and boost operational efficiency.
To stay competitive, businesses must:
- Reskill employees to work with AI technologies.
- Invest in infrastructure to support AI and cloud computing.
- Manage technical debt to prevent system inefficiencies.
Regional Growth Forecasts
Asia Pacific Leads the Charge
Tech spending in Asia Pacific is projected to grow by 5.6% in 2025, with:
- India leading at 9.6% growth.
- Governments in China and India driving digital initiatives.
- Japan and South Korea ramping up AI and semiconductor investments.
North America’s Dominance in AI Spending
North America is expected to grow by 6% in 2025, with the U.S. surpassing $2 trillion in tech spending for the first time. The key sectors fueling this growth include:
- Financial services & insurance.
- Government IT modernization.
- Media & business services.
The U.S. will also account for 46% of AI software spending, reinforcing its leadership in generative AI and cloud adoption.
Europe’s Tech Market Surpasses $1.5 Trillion
In Europe, tech spending is forecasted to rise by 5% in 2025, exceeding $1.5 trillion for the first time. By 2029, software and IT services will make up 78% of total spending, reflecting an accelerated push towards digital transformation and automation.
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Strategic Tech Investments Essential for Future Growth
Michael O’Grady, Principal Forecast Analyst at Forrester, highlighted the significance of AI, cloud, and cybersecurity in reshaping industries over the next five years.
“Technology investments in AI, cloud, and cybersecurity will be critical for businesses to stay competitive. However, companies must also focus on managing their legacy systems and reducing technical debt to sustain long-term growth,” O’Grady said.
Conclusion: The Road Ahead for Global Tech
The Forrester report underscores that strategic planning and investment in cutting-edge technologies will be key as businesses navigate the next phase of digital transformation. Companies that prioritize AI, cloud, and cybersecurity while maintaining a balance between innovation and legacy system upgrades will gain a significant competitive edge in the evolving tech landscape.
