Spending on global technology will grow by 5.6 per cent to $4.9 trillion this year, according to a new report by Forrester.

The advisory firm attributed this growth to increased investment in cybersecurity and the modernisation of legacy systems.

The report said that software and IT services combined will account for 66 per cent of global technology spend in 2025.

Software alone is growing at a rate of 10.5 per cent and is expected to capture 60 per cent of global tech spend growth by 2029, making it the fastest-growing tech sector, according to the report.

Forrester predicts that investment in genAI will drive industry-specific growth with industries such as financial services and retail increasingly adopting AI-enabled tools to enhance customer experiences and operational efficiency.

The company said that this growth in genAI investments will subsequently force businesses to reposition their workforce, compete for tech talent, and lower technical debt.

Across different regions, India will see the fastest growth with spending expected to hit about 9.6 per cent this year.

North American tech spend will grow by six per cent in 2025, exceeding $2 trillion for the first time. The US leads with 41 per cent of global tech spending and 46 per cent of AI software spend.

European tech spend will grow by five per cent in 2025, with spending exceeding $1.5 trillion for the first time. Software and IT services will capture 78 per cent of tech spend in Europe by 2029, an increase from 68 per cent in 2016.

“Over the next five years, technology investments will reshape industries at an unprecedented pace,” said Michael O’Grady, principal forecast analyst at Forrester. “genAI, cloud technologies, and cybersecurity will take centre stage, transforming how businesses operate and deliver value.

“Companies that prioritise these investments will not only strengthen their competitive edge but also achieve sustainable growth, but it’s important that they also balance their rapid tech investments with ongoing efforts to manage legacy systems and reduce technical debt.”

---