After a few years of “growth at all costs” and the purchase of systems and services to accommodate such growth, the tech sector saw a slowdown in 2022 and 2023. That’s not news to anyone who makes a living building, buying, or selling technology—in other words, pretty much everyone.
Recent numbers from Forrester, however, foretell an uptick in tech spending in 2024. The research firm forecasts U.S. tech spending will increase 5.5% this year, up from 4.5% in 2023. That may not sound like a lot, but according to Forrester that amounts to $2.4 trillion.
Software leads the way
What’s driving the spend in 2024? Software and IT services will lead the pack, with software spend growing almost 2x that of other categories, according to Forrester’s “U.S. Tech Market Forecast, 2023 to 2027.” And despite our predilection for web-based apps that allow us to work from anywhere, prepackaged software will see the fastest growth, the report notes.
Cloud also will continue its march for dominance, with Microsoft and Google Cloud both seeing revenue growth of slightly more than 25% in 2023, with no signs of slowing down.
Technology refreshes and ways to improve everything from cybersecurity to customer experience also are expected to drive tech spending in 2024. Siemens saw its services revenue grow 15% in 2023 and expects “double-digit long-term growth in its digital business vertical,” notes Michael O’Grady, forecast analyst, and Michael Kearney, data researcher, at Forrester in a blog post.
The verticals factor
The research firm sees financial services and healthcare as two markets ripe for technology spending, thanks in part to a continued focus on innovation and working smarter, not harder. Cost management is also a big driver, especially in healthcare. Both sectors, however, are also spending to keep up with regulatory compliance.
To be clear, we are nowhere near the spending levels we saw a few years back. But a gradual increase in tech spending is better than no increase, and it’s a safe bet that’s something everyone can agree on.
