Gartner Forecasts Significant Growth in Global IT Spending, Driven by AI and Price Increases

Gartner's India IT spending forecast up at $161.5 billion, down 11.1% in percentage terms

India's overall IT spending is expected to grow by 11.1% to $161.5 billion in 2025 from $145.4 billion in 2024, which grew by 9.8% from 2023, according to the latest forecast by research and consulting firm Gartner. While this is a tad lower in percentage terms from its November forecast of 11.2%, in absolute terms, the spending is set to increase from the earlier estimate of $160 billion for 2025. In comparison, the worldwide IT spending is estimated to increase by 9.8% to $5.61 trillion in 2025, up from $5.11 trillion in 2024. In India, software and IT services are major drivers of IT spending growth, increasing 16.9% and 11.2% to $17.9 billion and $30.1 billion in 2025, respectively. While at a lower base, spending on data centre systems is expected to almost double in percentage terms at 19.1% this year to $5 billion, up from $4.2 billion last year when it grew 10.3%, data from Gartner showed. "While software spending is propelled by the price premium of generative AI (GenAI)-enabled solutions, IT services spending is fuelled by enterprises' need for cloudification, digitisation, and consulting services," said Naveen Mishra, VP analyst at Gartner. Global IT spending is surging, driven by the rapid rise of GenAI, Gartner said in a report. It is on pace to surpass $7 trillion in four years. "By 2028, GenAI will account for over $1 trillion in spending, including the new markets, such as AI models, specialised AI-managed services and AI-optimised IaaS (Infrastructure-as-a-Service)," the report stated. Iaas is a cloud computing model that provides on-demand access to computing resources such as servers, storage, networking, and virtualisation. Gartner predicts that by 2026, over 50% of software spends within application software will be influenced by GenAI. As enterprises focus on developing and enhancing technological frameworks for AI, investment in tools and platforms for deployment, management, and scaling will increase, Gartner added. According to Mishra, enterprises are investing in AI-ready infrastructure for targeted use cases. "The emphasis on accelerated servers for AI workloads is a significant driver, resulting in increased end-user spending in this segment in 2025 compared to the previous year," he said. "While budgets for CIOs (chief information officers) are increasing, a significant portion will merely offset price increases within their recurrent spending," said John-David Lovelock, distinguished VP analyst at Gartner. "This means that, in 2025, nominal spending versus real IT spending will be skewed, with price hikes absorbing some or all of budget growth. All major categories are reflecting higher-than-expected prices, prompting CIOs to defer and scale back their true budget expectations," Lovelock added.

Indian IT spending to grow 11.1% to $161.5 billion in 2025: Gartner

India's overall IT spending is expected to grow 11.1% year-on-year to $161.5 billion in 2025, according to the latest forecast by research and consulting firm Gartner. IT spending last year was $145.4 billion, which was a 9.8% growth over the previous year. While the forecast for this year is a tad lower in percentage terms from Gartner's November estimate of 11.2%, in absolute terms the spending is set to increase from $160 billion earlier estimated for 2025. In comparison, the worldwide IT spending is estimated to increase by 9.8% to $5.61 trillion in 2025, up from $5.11 trillion in 2024. In India, software and IT services are major drivers of IT spending growth, increasing 16.9% to $17.9 billion and 11.2% to $30.1 billion, respectively, in 2025. While at a lower base, spending on data centre systems is expected to almost double by 19.1% in this year at $5 billion, up from $4.2 billion last year when it grew 10.3%, data from Gartner showed. "While software spending is propelled by the price premium of generative AI (GenAI)-enabled solutions, IT services spending is fuelled by enterprises' need for cloudification, digitisation and consulting services," said Naveen Mishra, VP analyst at Gartner. Global IT spending is surging, driven by the rapid rise of GenAI, Gartner said in a report. It is on pace to surpass $7 trillion in four years. "By 2028, GenAI will account for over $1 trillion in spending, including the new markets, such as AI models, specialised AI-managed services and AI-optimised IaaS," the report said. IaaS is Infrastructure as a Service, a cloud computing model that provides on-demand access to computing resources such as servers, storage, networking and virtualisation. Gartner predicts that by 2026, over 50% of software spend within application software will be influenced by GenAI. As enterprises focus on developing and enhancing technological frameworks for AI, investment in tools and platforms for deployment, management and scaling will increase, Gartner added. According to Mishra, enterprises are investing in AI-ready infrastructure for targeted use cases. "The emphasis on accelerated servers for AI workloads is a significant driver, resulting in increased end-user spending in this segment in 2025 compared to the previous year," he said. "While budgets for CIOs (chief information officers) are increasing, a significant portion will merely offset price increases within their recurrent spending," said John-David Lovelock, distinguished VP analyst at Gartner. "This means that, in 2025, nominal spending versus real IT spending will be skewed, with price hikes absorbing some or all of budget growth. All major categories are reflecting higher-than-expected prices, prompting CIOs to defer and scale back their true budget expectations," Lovelock added.

Gartner Forecasts Worldwide IT Spending to Grow 9.8% in 2025

CIOs to Focus Budget Increases on Price Hikes in Recurrent Spending Worldwide IT spending is expected to total $5.61 trillion in 2025, an increase of 9.8% from 2024, according to the latest forecast by Gartner, Inc. "While budgets for CIOs are increasing, a significant portion will merely offset price increases within their recurrent spending," said John-David Lovelock, Distinguished VP Analyst at Gartner. "This means that, in 2025, nominal spending versus real IT spending will be skewed, with price hikes absorbing some or all of budget growth. All major categories are reflecting higher-than-expected prices, prompting CIOs to defer and scale back their true budget expectations." GenAI will Influence IT Spending, but IT Spending Won't Be on GenAI Itself Segments including data center systems, devices and software will see double-digit growth in 2025, largely due to generative AI (GenAI) hardware upgrades (see Table 1). However, these upgraded segments will not differentiate themselves in terms of functionality yet, even with new hardware. Table 1. Worldwide IT Spending Forecast (Millions of U.S. Dollars) 2024 Spending 2024 Growth (%) 2025 Spending 2025 Growth (%) Data Center Systems 329,132 39.4 405,505 23.2 Devices 734,162 6.0 810,234 10.4 Software 1,091,569 12.0 1,246,842 14.2 IT Services 1,588,121 5.6 1,731,467 9.0 Communications Services 1,371,787 2.3 1,423,746 3.8 Overall IT 5,114,771 7.7 5,617,795 9.8 Source: Gartner (January 2025) "GenAI is sliding toward the trough of disillusionment which reflects CIOs declining expectations for GenAI, but not their spending on this technology," said Lovelock. "For instance, the new AI ready PCs do not yet have 'must have' applications that utilize the hardware. While both consumers and enterprises will purchase AI-enabled PC, tablets and mobile phones, those purchases will not be overly influenced by the GenAI functionality." Spending on AI-optimized servers easily doubles spending on traditional servers in 2025, reaching $202 billion dollars. "IT services companies and hyperscalers account for over 70% of spending in 2025," said Lovelock. "By 2028, hyperscalers will operate $1 trillion dollars' worth of AI optimized servers, but not within their traditional business model or IaaS Market. Hyperscalers are pivoting to be part of the oligopoly AI model market." In India, spending on data center systems is expected to increase 19.1% in 2025, nearly doubling its growth rate from 2024 (see Table 2). Table 2. India IT Spending Forecast, 2024-2025 (Millions of U.S. Dollars) 2024 Spending 2024 Growth (%) 2025 Spending 2025 Growth (%) Data Center Systems 4,210 10.3 5,013 19.1 Devices 55,486 12.2 62,516 12.7 Software 17,893 15.6 20,909 16.9 IT Services 30,124 9.0 33,489 11.2 Communications Services 37,672 4.7 39,585 5.1 Overall IT 145,386 9.8 161,511 11.1 Source: Gartner (January 2025) "Enterprises are investing in AI-ready infrastructure for targeted use cases," said Naveen Mishra, VP Analyst at Gartner. "The emphasis on accelerated servers for AI workloads is a significant driver, resulting in increased end-user spending in this segment in 2025 compared to the previous year." Software and IT services are major drivers of IT spending growth in India, increasing 16.9% and 11.2% in 2025, respectively. "While software spending is propelled by the price premium of GenAI-enabled solutions, IT services spending is fueled by enterprises' need for cloudification, digitization, and consulting services," said Mishra. "Gartner predicts that by 2026, over 50% of software spend within application software will be influenced by GenAI. As enterprises focus on developing and enhancing technological frameworks for AI, investment in tools and platforms for deployment, management, and scaling will increase." Gartner's IT spending forecast methodology relies heavily on rigorous analysis of the sales by over a thousand vendors across the entire range of IT products and services. Gartner uses primary research techniques, complemented by secondary research sources, to build a comprehensive database of market size data on which to base its forecast. The Gartner quarterly IT spending forecast delivers a unique perspective on IT spending across the hardware, software, IT services and telecommunications segments. These reports help Gartner clients understand market opportunities and challenges. The most recent IT spending forecast research is available to Gartner clients in "Gartner Market Databook, 4Q24 Update." More information on the forecast can be found in the complimentary Gartner webinar "IT Spending Forecast, 4Q24 Update: GenAI's Impact on a $7 Trillion IT Market." Additional leadership trends will be presented during Gartner IT Symposium/Xpo, the world's most important conference for CIOs and other IT executives. Gartner analysts and attendees will explore the technology, insights and trends shaping the future of IT and business, including AI, business transformation, cybersecurity, customer experience, data analytics, executive leadership and more. Follow news and updates from the conferences on X using #GartnerSYM, and on the Gartner Newsroom. Upcoming dates and locations for Gartner IT Symposium/Xpo include: September 8-10, 2025| Gold Coast, Australia October 20-23, 2025| Orlando, FL October 28-30, 2025| Tokyo, Japan November 10-13, 2025| Barcelona, Spain November 17-19, 2025| Kochi, India About Gartner for High Tech Gartner for High Tech equips tech leaders and their teams with role-based best practices, industry insights and strategic views into emerging trends and market changes to achieve their mission-critical priorities and build the successful organizations of tomorrow. Additional information is available at www.gartner.com/en/industries/high-tech. Follow news and updates from Gartner for High Tech on X and LinkedIn using #GartnerHT. About Gartner Gartner, Inc. (NYSE: IT) delivers actionable, objective insight to executives and their teams. Our expert guidance and tools enable faster, smarter decisions and stronger performance on an organization's mission-critical priorities. To learn more, visit gartner.com.

Gartner sees 10% IT spending jump in 2025, but don't get too excited - SiliconANGLE

Gartner Inc. expects worldwide information technology spending to grow 9.8% to $5.61 trillion in 2025, well ahead of the 7.7% increase in 2024, but don't get your party hats out just yet. The research firm says much of the spending bump will cover price increases for existing products and services. "The median amount that CIOs are putting aside for price increases is unusually high," said John-David Lovelock, a Gartner distinguished VP analyst. IT buyers didn't allocate much budget for price hikes between 2016 and 2020, as contract negotiations or service modifications typically mitigated them. However, Lovelock noted that since 2022, software providers have been steadily raising prices on cloud offerings due to rising costs for skills and operational expenses. Concerns about tariffs that the incoming Trump administration may impose may also push prices higher. Software spending is expected to grow 14.2% this year compared to 12% last year. Leading the spending surge are data center systems, which are expected to grow 23.2% this year, coming on top of a torrid 39.4% growth rate in 2024. Generative AI has shifted spending on data center servers permanently up and to the right, a phenomenon Lovelock called "an incredible change" in market dynamics. By 2028, hyperscalers, service providers, colocation and cloud facilities will have spent roughly $1 trillion on AI-optimized servers. "In six years, we're going to triple the spending on servers we had over the last 20 years," he said. Lovelock said the outsized growth in data center spending will likely continue in the foreseeable future. That's despite Gartner's belief that generative AI is sliding toward the "trough of disillusionment" that invariably follows the peak of the hype cycle. "We started at the peak of inflated expectations, where companies thought they could lay off all their employees and triple their revenue because of gen AI," he said. "Most of the proofs of concept in 2024 failed." Disillusionment is a natural part of the adoption cycle for any breakthrough technology and shouldn't indicate that interest in generative AI will wane, Lovelock said. Rather, "2025 is the year of 'let's get down to what we can actually do with it,'" he said. "Expectations and spending aren't linked." Another factor likely to skew IT spending this year is a resurgence in PC sales fueled by scheduled replacements of machines purchased during COVID-19 and Microsoft Corp.'s plan to end support for Windows 10 on Oct. 14. Gartner predicts device sales will grow 10.4% this year up from 6% growth last year. Many of those replacement machines will be the new breed of artificial intelligence PCs, which come with neural processing units. Gartner forecasts AI PCs will make up 43% of shipments in 2025 and nearly 100% by 2026. Though vendors aggressively market the devices as the future, businesses and consumers aren't necessarily demanding them yet. "There's really no software that takes advantage of that functionality," Lovelock said. "The AI assistants still make calls back to the cloud. This is more about future-proofing." Gartner said IT services companies and hyperscalers will account for over 70% of spending in 2025 and will soon dominate the AI software and services market as model training costs spiral upward. "The current round of models cost over $100 million to train," Lovelock said. "By 2026-2027, training costs for the next-generation models could reach $10 billion per model." At those prices, few new entrants are likely to obtain the funding they need to enter the market.