Tech spending in both Americas and Europe is expected to get strong and there are signs that tech providers may be nearing the bottom of the market, indicating a recovery in tech and tech services spending in the third quarter of calendar 2024, according to global tech analysts.
Hansa Iyengar, Senior Principal Analyst Enterprise IT at at Omdia, a London-based technology research firm said, ‘‘Overall, the global tech sector is bouncing back after the recalibration post-pandemic.’‘
According to her, tech spending in the Americas and Europe is expected to recover, especially around cybersecurity, AI, data/analytics, data lakes, etc. In the U.S., spending will be driven by healthcare, BFSI, and retail. In Europe, increasing regulations around privacy and sustainability will drive spending in related tech such as cybersecurity, IoT, digital twins, sustainability as a service, etc.
The industry has been decelerating for the last six quarters and now has reached a stage of contraction or de-growth. ‘‘As we look at this year, we believe that the first two quarters of 2024 will continue to be difficult, however, we are seeing some signs that we may be near the bottom of the market and that we could start to see a recovery in tech and tech services spending in the third quarter,’‘ said Peter Bendor-Samuel, Founder and Chief Executive Officer, Dallas-based Everest Group.
However, he cautioned if the U.S slipped into recession, then the markets see a pullback in tech and tech services prolonged. ``There is significant hesitancy (to spend) in the market but signs indicate that at least tech spending is starting to come back,’‘ Bendor-Samuel added.
Interest in AI will wane
AI holds attention currently, but interest in it will wane towards the end of the year as most organisations do not have the data foundations and practices needed to scale AI, according to Iyengar effectively.
‘’So the focus will shift back to basics – modernisation, data, and cybersecurity, with a keen focus on the cultural and change management aspects needed to scale AI and other emerging technologies,’‘ she opined.
However, HFS Research CEO and Chief Analyst Phil Fersht believed that “India’s IT services economy has a great opportunity with Generative AI but will blow it if they cannot change their stuffy ways of operating.’‘
He had said Indian tech providers “just can’t seem to break out of their paralyzed mindset” as they carried a lethargic approach to GenAI.
Fersht said Indian IT firms seemed to think that global enterprises’ traditional model of outsourcing IT services would continue indefinitely. ‘‘ There is a persisting expectation of the sector that global clients will consistently provide opportunities for Indian IT service firms, despite significant changes in the economic landscape. This flawed mindset may expose the Indian services industry to newer challenges,’‘ he warned.
