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Why AI will drive tech investments

04 Jul, 2022

There’s no getting away from the fact that all industries are operating in an unpredictable geo-political landscape, and markets may continue to be volatile. But analysts are positive about the potential for tech in 2024 – with a cooling trend in inflation in many areas pointing to a supportive environment for spending and investments.

In Europe, Gartner predicts that IT spending will grow by a record 9.3% to a total of USD $1.1 trillion in 2024. John-David Lovelock (VP Analyst at Gartner) said in a press release:

“Despite a conflated economic situation, IT spending in Europe continues to be recession-proof. CIOs in Europe who pursued the ‘growth at all costs’ strategy for over a decade, are now shifting the emphasis of ongoing IT projects toward cost control, efficiencies and automation, while curtailing IT initiatives with longer ROIs.”

Within companies, Gartner predicts that software and IT services will be the focus of spending for CIOs in the region – particularly cloud operations, cybersecurity in the cloud, and planning for AI and generative AI adoption and security.

Generative AI will remain a focus for business development and for investors

Following the boom of GenAI use over the last 12 months, it will remain a key growth area for businesses (working to understand and adopt generative AI tools) and for investors. According to McKinsey, three quarters of use cases for AI in business will come under four categories:

  • Marketing and sales
  • Customer operations
  • Software engineering
  • Research and development

And AI could increase business profits by $4.4 trillion annually. McKinsey’s research suggests that GenAI will probably deliver the biggest impact in life sciences, high tech, and banking; but other industries have the potential to yield significant ROI from this technology too.

A large proportion of the value delivered by GenAI will come from growth in productivity, as it enables employees to engage in new work activities while lower-level or repetitive tasks are handled by tech. McKinsey estimates that generative AI could increase labour productivity by up to 0.6% per year through to 2040.

According to The Economist, generative AI will ‘go mainstream’ in 2024 – but ‘data-savvy firms’ will be the first to experience real benefits.