Global spending on IT and business services was down slightly in Q4, but there are signs of a possible market rebound, per ISG research. The combined market ACV in Q4 was $23.4 billion, down 3% from the prior year. Managed services ACV remained flat, while XaaS declined 6%. However, ISG forecasts 15% growth for XaaS and 4.25% growth for managed services in 2024. The market may have bottomed out and is expected to rise due to cooling inflation and planned interest rate cuts. AI technology and application modernization projects are also expected to positively impact technology spending in the coming years.
Couple that with some Forrester data. Global tech spending is expected to increase by 5.3% this year, driven by higher investment in software and IT services, including generative artificial intelligence (GenAI). However, businesses need to be more prepared for the impact of AI. The Asia-Pacific region will see the highest growth in tech spending, followed by North America and Europe. Investments in GenAI software alone are projected to exceed $227 billion by 2030.
PC sales showed positive growth in the last quarter of 2023 after a slump caused by the pandemic. As organizations enter delayed refresh cycles, PC demand is expected to increase, leading to potential price hikes due to restricted component production. Gartner expects product shipments to grow between 4% and 5% this year, while IDC forecasts 3.4% market growth in the PC market.
Consumer sentiment in the United States has surged to its highest level since mid-2021, jumping 13 percent in January, reflecting optimism about easing inflation and rising incomes. Gas prices have fallen, down 40 percent since June 2022, jobless claims are at their lowest point in more than a year, and sales of cars and goods have increased. The stock market is also reaching new records, with the S&P 500 closing at an all-time high on Friday.
Why do we care?
2024 may be a lot more positive as this gains momentum. Embrace the optimism. Current trends in the IT and business services market point towards a period of recovery and growth, driven by technological advancements, particularly in AI, and buoyed by positive economic indicators.