Let’s kick off the week with a look at the state of play.
Gartner predicts that global IT spending will reach $5.06 trillion in 2024, with an 8% growth rate. The increase is primarily due to the repricing of communication services, while investment in generative AI also impacts spending. Spending on data center systems is expected to grow by 10% in 2024, driven by GenAI initiatives. IT services are projected to be the largest market, with a 9.7% growth rate, while devices are expected to have the slowest growth at 3.6%.
According to IDC, there has been a steady increase in enterprise technology spending, leading to a rise in managed services deals. Although the total number of deals declined compared to the previous year, the average deal size remained the same. The USA accounted for more than 45% of the global contract value, followed by Western Europe. AI-related deals saw a significant increase, particularly in manufacturing and financial services. IDC expects a higher number of large managed services contracts in 2024, focusing on AI and cloud technology.
According to a Gartner survey, 63% of organizations worldwide have implemented a zero-trust strategy, with 78% investing less than 25% of their cybersecurity budget. The survey also found that many organizations lack clarity on best practices for zero-trust implementations.
According to the International Data Corporation (IDC), global smartphone shipments increased by 7.8% in the first quarter of 2024, with Samsung reclaiming the top position from Apple. The report also highlights the growth of Xiaomi and Transsion and the shift in power among the top players in the market.
According to the latest state-of-the-industry report from Information Services Group (ISG), Europe’s demand for IT and business services in Q1 of 2024 rose for the first time in a year, driven by growth from the banking, financial services, and insurance sectors. The EMEA ISG Index™ shows a 2.5% increase in annual contract value (ACV) for the combined market of managed services and cloud-based as-a-service, reaching $7.5 billion. Managed services ACV rose 3%, while business process outsourcing (BPO) soared 40%. The as-a-service segment also grew, with a 2% increase in ACV.
The Russell 2000, a proxy for small businesses, has a 5-day return of -2.40% and a year-to-date of -3.55%. The S&P 600, which looks at the smallest companies, has a year-to-date of -4.41%, showing even for the past five days.
Why do we care?
Moderate growth seems to be the trend on the technology services front. The substantial growth in business process outsourcing (BPO) and steady increases in managed services and as-a-service platforms reflect an ongoing shift towards outsourcing and cloud-based solutions, driven by the need for efficiency and scalability in business operations. These are all key areas to focus on to maximize success.