According to International Data Corporation’s (IDC) Worldwide ICT Spending Guide Enterprise and SMB by Industry, ICT spending in Europe will reach $1,1-trillion in 2022 and will get close to $1,4-trillion by 2026, growing at a 5% five-year 2021-2026 compound annual growth rate (CAGR).

Investments in software will drive most technology spending in Europe in 2022 and software will be the fastest-growing technology group by year-on-year growth, supported by fast growth in artificial intelligence platforms, collaborative applications, and software quality and life-cycle tools.

With investments in cloud-first solutions, the software market has remained resilient to factors that impacted the hardware market, which is expected to decline 0,1% this year.

Inflationary pressures, an expected recession, and the Russia-Ukraine War are dampening demand for hardware in Europe. Spending on devices will be the most impacted by the increasing cost of living, product shortages, and suspended shipments.

Consumer, banking, and discrete manufacturing will be among the top spenders in ICT, absorbing almost 46% of overall ICT spend in 2022. Europe is affected by supply chain disruptions, many of which are linked to the war in Ukraine. This is affecting many industries, which are turning to automation to optimize processes and minimize disruption.

Banking will be focusing on transformative processes that focus on automation and customer-centricity to redefine how financial services deliver employee and customer experiences, supporting and reimagining core banking services, risk management, HR and talent management, and audit and compliance through automation.

On the manufacturing side, a shortage of skilled staff is wreaking havoc in the supply chain. Many companies will invest in tech to reduce pressure on existing staff, automate processes, and reduce their reliance on human-based labor when resources are not available.

The situation in Russia is less bright, with an overall 23% decline in ICT spend expected for 2022. This will be driven by a strong reduction in hardware spending related to many hardware-supplying companies pulling out of Russia. Nonetheless, software and IT services will continue to grow due respectively to the resilience of the technology and the reliance on domestic businesses.

“European companies are caught in a series of challenges including skill shortages, supply chain disruptions, post-COVID-19 recovery, high inflation, rising costs of living, and armed conflict in Eastern Europe. Technology has proved to be a solution to many of these challenges as organizations are looking at automation and real-time decision making to maximize their performance in such challenging times,” says Andrea Minonne, research manager at IDC UK.