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IT spending Europe

European ICT spending forecast to grow nearly 9% in 2025

As we look into the future of technology, one thing is clear: IT spending in Europe is on an exciting trajectory. According to the latest forecast by Gartner, we can expect that IT spending in Europe will reach a staggering $1.28 trillion by 2025, marking an impressive growth of 8.7% from 2024. So, what does this mean for businesses, IT leaders, and tech enthusiasts alike?

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Let’s dive into the key insights and trends that are shaping this growth.

The Rise of IT Spending in Europe: What’s Driving the Growth?

The 2024 Spending Landscape

Before we dive into 2025 predictions, it’s essential to understand the current environment. By the end of 2024, IT spending in Europe is projected to hit $1.18 trillion. This increase is primarily fueled by two significant factors:

  • AI-Related Infrastructure Development: The push for data center systems to support AI initiatives is promoting robust investments in technology.
  • Cloud and Security Investments: CIOs are increasingly recognizing the importance of public cloud services and security measures, with spending expected to reach $123 billion and $47 billion, respectively, in 2024.

“In 2024, the surge of building out AI-related infrastructure by technology providers is driving high levels of spending on data center systems in Europe,” said John-David Lovelock, Distinguished VP Analyst at Gartner. “CIOs in Europe will continue investing in public cloud end-user spending, which is estimated to reach $123 billion in 2024, and grow their security spending, projected to reach $47 billion in 2024.”

A Record-Breaking Year Ahead

The year 2025 is predicted to be historical for IT spending in Europe, potentially establishing itself as the year with the highest growth rates since the pandemic’s aftermath in 2021. This heightened investment reflects businesses’ willingness to capitalize on digital transformation initiatives and emerging technologies.

Breaking Down the IT Spending Forecast for 2025

Gartner provides a comprehensive forecast of IT spending in various segments, with data presented in a clear and actionable format. Here’s a breakdown of expected spending across major IT categories in 2024 and 2025.

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Spending Priorities in 2025

European businesses that have recognized IT’s value during the pandemic are set to significantly boost IT spending in 2025 to stay competitive and grow revenue. Aided by surging interest in generative AI (GenAI) solutions, CIOs in Europe will drive their IT budgets into an era of high growth and innovation. 2025 is poised to set a record as the highest growth rate in IT spending in a single year in Europe since the post-pandemic surge in 2021 (see Table 1).

Table 1. Europe IT Spending Forecast (Millions of U.S. Dollars)

 

2024

Spending

 

2024

Growth (%)

 

2025

Spending

 

2025

Growth (%)

Data Center Systems 50,043 11.1              54,410 8.7
Devices          134,239 6.4 146,700 9.3
Software          254,554 11.4 288,163 13.2
IT Services          448,572 6.6 489,767 9.2
Communications Services          292,280 3.0 302,705 3.6
Overall IT       1,179,687 6.8 1,281,744 8.7

Source: Gartner (November 2024)

“The limited success of many pilots and proofs of concept (POCs) in 2024, will push European organizations to shift from building their own GenAI solutions to buying and implementing partner solutions in 2025,” said Lovelock.

Gartner estimates spending on IT services related to AI in Europe will grow from $78 billion in 2024 to $94 billion in 2025.

Trends Behind the Numbers

  1. Data Center Systems will continue to see increased demand, particularly for AI-optimized servers. Although growth will slow to 8.7% in 2025, it’s still a substantial rate.
  2. Device Spending will witness a significant uptick, with forecasts suggesting a 9.3% increase as organizations refresh their technology stacks.
  3. Software Investment is projected to rise the most, reflecting a 13.2% growth, underscoring the continuous need for advanced software solutions amidst the tech evolution.
  4. IT Services will grow steadily, with 9.2% expected in 2025, driven by heightened needs for cloud migration and digital consulting services.
  5. Communication Services will see more modest growth, but every increment counts in today’s interconnected global market.

Data Center Trends in Europe

End-user spending on servers in Europe is estimated to grow 25% in 2024 due to increased demand for AI-optimized servers. Spending on servers will continue to grow in 2025 but at a slower pace (11%).

“Europe has seen a remarkable 46% increase in server spending by technology providers in 2024. In 2025, technology companies will continue building out the infrastructure needed for training GenAI models today and inferencing them in the future,” said Lovelock.

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, 3Q24 Update.”

Why Is This Shift Happening?

  • Increased Demand for AI Capabilities: As organizations begin adopting AI solutions, the infrastructure needs to support this transformation.
  • Focus on Scalability: Companies are investing in scalable solutions, enabling them to adapt quickly to market demands.

The Methodology Behind Gartner’s Forecast

To make such accurate predictions, Gartner relies on a meticulous IT spending forecast methodology. This includes:

  • Primary Research Techniques: Engaging directly with over a thousand vendors to gather sales data across various IT product categories.
  • Secondary Research Sources: Complementing primary data with robust market analysis to ensure comprehensive coverage.

This rigorous approach ensures that Gartner’s forecasts are not just educated guesses but are backed by significant market insights.

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Understanding Market Opportunities through Gartner’s Research

Getting ahead in the rapidly changing IT landscape means understanding potential market opportunities and challenges. Gartner’s quarterly IT spending forecast provides valuable insights into:

  • Hardware Trends
  • Software Trends
  • IT Services
  • Telecommunications Segments

By analyzing these segments, businesses can develop informed strategies to enhance their technology investments.

Upcoming Gartner IT Symposium/Xpo

One of the best places to gain deeper insights into IT spending and innovation is the Gartner IT Symposium/Xpo. This event serves as a crucial platform for CIOs and other IT executives to learn from industry experts and network with peers.

Key Information About the Symposium

  • What: Gartner IT Symposium/Xpo
  • When: November 11-13, 2024
  • Where: Kochi, India

This gathering is not just a conference but an experience that can help technology leaders amplify the impact of technology in their organizations.

Summary: What Lies Ahead for IT Spending in Europe?

As we look forward to 2025, the forecasted growth of IT spending in Europe reveals a robust landscape driven by innovation, especially in AI and cloud technologies. Businesses are anticipated to invest more in established solutions, enhancing their infrastructure and services. Now is the time for CIOs to strategize for growth, leveraging the trends that are likely to reshape their IT environments.

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Ana, a telecom wiz who keeps the world connected while traveling, ensures your journeys are never out of touch.