The Information and Communications Technology (ICT) sector is somewhat resilient to the current volatility in the Global Networked Economy. Forward-thinking CEOs will continue to invest in their high-priority strategic initiatives.
For example, here is a case in point on the European continent.
ICT spending in Europe will reach $1.2 trillion in 2023 and will surpass $1.4 trillion by 2026, posting a 5.4 percent compound annual growth rate (CAGR), according to the latest market study by International Data Corporation (IDC).
European ICT Market Development
Overall European ICT spending is forecast to grow by 4.2 percent year-on-year in 2023, driven by the Scandinavian countries and the United Kingdom.
On the other hand, sanctions imposed by the EU and the growing number of companies leaving Russia will result in the Russian ICT market shrinking by 9.4 percent year-on-year.
"While organizations in most countries are anticipating a recession this year, the outlook for European ICT spending remains positive," said Zsolt Simon, senior research analyst at IDC.
They regard technology investments as a means of gaining a competitive edge, as well as providing solutions for many of the challenges arising in an extremely volatile market.
Software will be the fastest-growing technology group on a year-on-year basis, and investments in cloud-first solutions will drive the overall technology market in Europe in 2023.
Software has proven to be highly resilient to disruptions currently impacting the continent, supported by rapid growth in the adoption of artificial intelligence (AI) platforms and software quality and lifecycle tools -- as well as application platforms, integration and orchestration middleware, and collaborative applications.
Despite inflationary pressures and economic recession in several European countries, investments in IT and business services, telecom services, and hardware will continue to increase as well.
However, the device market has suffered from the declining purchasing power of consumers, supply chain constraints, and cost-saving measures among enterprises, which is expected to result in an overall decline in device spending of 2.2 percent in 2023.
Moreover, the consumer sector will continue to be the largest source of ICT spending in 2025, representing almost 28 percent of total European ICT revenue, although year-on-year growth will remain below 1 percent, as the increasing cost of living is taking a toll on consumer purchases.
Outlook for ICT Applications Investment Growth
Banking and discrete manufacturing will take the second and third positions, respectively, in the ranking of highest-spending industries, accounting for a combined market value of over $210 billion.
Entities in the banking sector will be focusing on accelerating automation to support core banking services, database management, and resource management. AI will be leveraged to offer more flexible and more personalized services for improved customer experiences.
Manufacturing companies will invest in technologies to ensure cost-effective operations, handle increasing amounts of data, and reduce pressure on staff through robotics and process automation robotic process automation (RPA).
That said, I anticipate the ongoing shift to distributed workforce models will continue to drive target investment strategies as more C-suite leaders respond to the global trends impacting digital growth. The demand to reach and engage skilled high-performance digital talent across the globe will fuel this transformation.