Forrester’s latest market analysis indicates that organizations in Europe will ramp up IT spending by 5% in 2025. They project total spending to hit $4.9 trillion, driven largely by investments in artificial intelligence, cybersecurity, and cloud services. In fact, spending in these areas is expected to grow by 5.6%, an increase from 4.6% in the previous year.
When you look at global spending, Europe lags behind the US and Asia-Pacific. In 2024, the US made up 41% of global tech expenditures and an impressive 46% of AI software spending. It’s important to note that nearly 70% of the fastest-growing companies from 2015 to 2023 hail from the US, with over half being in media and information.
Meanwhile, spending in the Asia-Pacific region is set to grow by 5.6% in 2025. Countries like India, the Philippines, Vietnam, and Indonesia are leading the charge, fueled by impressive GDP growth. Government initiatives in China and India, along with increased investment in GenAI and semiconductors in Japan and South Korea, will further boost spending. India is predicted to experience the fastest growth in the region, with a whopping 9.6% increase in tech spending.
Forrester highlights that software and IT services will make up 66% of global tech spending in 2025, driven by investments in cybersecurity services and modernizing outdated systems. Software alone is set to grow by 10.5%, likely capturing 60% of global tech growth by 2029, positioning it as the fastest-growing sector.
Michael O’Grady, Forrester’s principal forecast analyst, emphasizes the impact of technology investments over the next five years, stating they will reshape industries rapidly. He predicts that by 2029, software spending by enterprises and governments will reach 1.7% of global GDP, nearly doubling since 2016. O’Grady mentions that GenAI will transform industries like financial services, media, and retail, improving customer interactions through personalized virtual assistants.
According to the analysts, IT consulting and system integration services will represent 19% of global IT spending, while tech outsourcing and hardware maintenance will account for 15%. O’Grady points out that as infrastructure as a service continues to grow, outsourcing will outpace consulting services.
He stresses that companies concentrating their investments on cybersecurity and AI will not only gain a competitive edge but also achieve sustainable growth. However, there’s a caveat—companies must balance their rapid tech investments with the management of legacy systems and reducing technical debt. O’Grady underscores that legacy systems still consume two-thirds of global tech spending, and the rapid evolution of tech skills calls for continuous workforce renewal.