Forrester: Global Tech Spend Will Reach $4.4 Trillion In 2023 Despite A Turbulent Macroeconomic Environment

Rhea-AI Summary

Forrester projects a 4.7% growth in global tech spending, reaching $4.4 trillion in 2023, driven by increasing demand for software and IT services. By 2027, tech software and services will constitute 66% of total tech spend, up from 60% prior to the pandemic. The public cloud market is expected to exceed $1 trillion by 2026, capturing nearly 25% of global tech spending. Regional growth varies, with the Middle East and Africa at 5.6%, Asia Pacific at 5.4%, and North America at 5.1%, while Europe lags at 3.6% due to economic challenges.

Positive

• Global tech spend projected to reach $4.4 trillion in 2023, growing 4.7%.
• Software and IT services expected to make up 66% of total tech spend by 2027.
• Public cloud market forecasted to exceed $1 trillion by 2026, capturing nearly 25% of tech spend.
• Middle East and Africa to grow tech spend by 5.6%, with potential for $180 billion internet economy by 2025.

Negative

• North American tech spend growth projected to decline from 7.4% to 5.4% in 2023 due to inflation and interest rate hikes.
• European tech spend growth forecasted at only 3.6%, impacted by economic recession and rising unemployment.

Software and IT services, fueled by cloud, will capture nearly two-thirds of global tech spend by 2027

CAMBRIDGE, Mass.--(BUSINESS WIRE)-- According to Forrester’s (Nasdaq: FORR) Global Tech Market Forecast, 2022 To 2027, in 2023, global tech spend will grow 4.7% to reach $4.4 trillion. The Middle East and Africa (MEA) and Asia Pacific (APAC) will experience the fastest regional tech spend growth, despite macroeconomic challenges of slowing liquidity, tight labor markets, and geopolitical turmoil. By 2027, tech software and IT services will capture 66% of global tech spend — up from 60% pre-pandemic. A boost in cloud application and platform services will aid this growth. Forrester forecasts that the public cloud market will reach $1 trillion by 2026, capturing nearly a quarter of global tech spend.

Despite facing a difficult 2023, tech executives can accelerate their organizations’ growth by both improving operational efficiency and investing in areas such as research and development, cybersecurity, and enterprise digital transformation. In 2023, Forrester projects regional tech spend growth to be:

• 5.6% in the Middle East and Africa. By 2025, Africa’s internet economy could reach $180 billion, more than 5% of the continent’s GDP, while the Saudi government plans to spend $25 billion on tech. As cloud adoption accelerates, Nigeria and South Africa will see the potential for fast R&D investment growth over the next two years.

• 5.4% in Asia Pacific. China’s tech spend is forecasted to see at least 7% annual growth rates from 2024 to 2027. Software and IT services investment is a high priority for large Japanese companies, while India’s domestic tech spend grows by 9.6% in 2023. Longer term, R&D investment will also encourage tech spend in the Asia Pacific region.

• 5.1% in North America. Interest rate hikes, high inflation, and low real GDP growth are dampening North America’s tech spend outlook. In 2023, US tech spend growth will be 5.4% — down from 7.4% the year prior. Yet North American tech purchases are expected to grow between 5.6% to 5.8% from 2024 to 2027 due to increased R&D investments.

• 3.6% in Europe. High inflation and weak business confidence will persist in the region. Additionally, the UK, Italy, and Germany will all see unemployment rates rise as their economies fall into recession. Tech purchases are forecasted to grow, however, between 4.8% and 5.5% from 2024 to 2027, enabled by enterprise cloud adoption.

“Despite macroeconomic uncertainty, global tech spend will surpass more than $4 trillion in 2023, as technology remains crucial for businesses,” said Michael O’Grady, principal forecast analyst at Forrester. “Over the next five years, we anticipate tech spend growth to increase even further globally. Factors including increased R&D investment in the Middle East and Africa, Asia Pacific, and North America; companies in APAC investing more in software and IT services; and accelerated cloud adoption in MEA and Europe will all continue to drive tech spending.”

Resources:

• Read Forrester’s Global Tech Market Forecast, 2022 To 2027 report (client access required).
• Learn more about Forrester’s forecast for global tech spend through 2027.
• Learn which actions tech executives can take to navigate the current economic downturn.
• Explore Forrester’s Planning Guide 2023: Technology Executives report.

About Forrester

Forrester (Nasdaq: FORR) is one of the most influential research and advisory firms in the world. We help leaders across technology, customer experience, digital, marketing, sales, and product functions use customer obsession to accelerate growth. Through Forrester’s proprietary research, consulting, and events, leaders from around the globe are empowered to be bold at work — to navigate change and put their customers at the center of their leadership, strategy, and operations. Our unique insights are grounded in annual surveys of more than 700,000 consumers, business leaders, and technology leaders worldwide; rigorous and objective research methodologies, including Forrester Wave™ evaluations; 100 million real-time feedback votes; and the shared wisdom of our clients. To learn more, visit Forrester.com.

View source version on businesswire.com: https://www.businesswire.com/news/home/20230202005161/en/

Ira Kantor

Forrester Research

ikantor@forrester.com

Source: Forrester

FAQ

What is Forrester's projection for global tech spending in 2023?

Forrester projects global tech spending to grow by 4.7% to reach $4.4 trillion in 2023.

How much will software and IT services account for global tech spend by 2027?

Software and IT services are expected to capture 66% of global tech spend by 2027.

What is the forecast for the public cloud market by 2026?

The public cloud market is expected to exceed $1 trillion by 2026.

Which region is expected to see the highest growth in tech spending?

The Middle East and Africa is projected to grow tech spending by 5.6% in 2023.

What challenges are North American and European tech markets facing?

North America faces a slowdown in growth due to inflation; Europe is hindered by recession and high unemployment.