In 2025, European technology spending will witness a significant uptick, growing 5% to reach a monumental €1.4 trillion. Software and IT services capture three-quarters of tech spend, a notable rise from its 68% share in 2016. Cloud computing, cybersecurity, generative AI, and the burgeoning digital economy will drive much of the growth. Highlights of European tech spending growth include:
Software spending. Software will see 10.4% growth and will capture more than a third of Europe’s tech spend by 2029. Enterprise adoption of cloud services are accelerating, with 45% of European enterprises using cloud computing in 2023, up from a 41% share in 2021. SAP’s EMEA software and cloud revenues indicate robust demand, with 12.5% growth in 2024. The AI growth opportunity is significant, as only 11% of EU enterprises were using AI in 2024. AI software spend in EU-5 is growing at twice the rate of the software market.
Hardware. Demand for AI-capable servers and the transition to Windows 11 following the end of support for Windows 10 help drive 10% hardware growth in 2025. Companies such as Dell and Lenovo reported strong revenue growth in 2024, and that trend is expected to continue in 2025.
IT services. IT services will see modest 2.9% growth in 2025, as companies like Capgemini, which generates 63% of its revenues from Europe, and Accenture saw slower growth in 2024. Infrastructure as a service remains a bright spot, helping outsourcing capture a larger share of the IT services market.
Markets in transition. The European telecom market, characterized by its fragmentation, will consolidate as companies optimize costs and achieve economies of scale. Europe faces the dual challenge of enhancing productivity to compete globally while balancing the environmental impact of increased tech adoption. Investments in AI, smart buildings, and the digitalization of sectors such as healthcare and automotive are key to addressing these challenges. Although the EU is currently falling short of its digital transformation plans, the more that countries invest in intangible goods like software, the more they transform their economies. Ireland, the Netherlands, Belgium, Sweden, the UK, France, and Switzerland focus more on high-value-add activities.
With a focus on software, cloud services, and AI, Europe is poised for significant tech-driven growth, provided it navigates the complexities of adoption, consolidation, and sustainability. To learn more about how to balance these competing factors and to see the numbers behind Europe’s forecasted €1.4 trillion tech spend in 2025 (which accounts for 31% of global tech spend), Forrester clients can read our new report, European Tech Market Forecast, 2024 To 2029. Other connected forecasts include our US and global tech spend forecasts for 2024 to 2029.
