Generative AI resembles a "tax" because revenue gains flow back to AI model providers, Garter has warned.
The consultancy firm has reduced its predictions for global IT spending, which is now expected to total $5.26 trillion in 2024 - an increase of 7.5% from 2023, but a decrease from the previous quarter’s forecast of 8% growth.
IT services spending is now predicted to grow by 7.1% in 2024, down from the 9.7% augured in Gartner's last forecast "due in part to slower spending across subsegments that include consulting and business process services."
Increased demand for Generative AI is also forecast to push up spending on data centre systems by 24% in 2024, a significant bump from the previous quarter’s forecast of 10% growth.
“The compute power needs of GenAI are being felt across the data center, and spending in that segment reflects this ravenous demand,” said John-David Lovelock, Distinguished VP Analyst at Gartner.
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“Generative AI (GenAI) is being felt across all technology segments and subsegments, but not to everyone’s benefit. Some software spending increases are attributable to GenAI, but to a software company, GenAI most closely resembles a tax. Revenue gains from the sale of GenAI add-ons or tokens flow back to their AI model provider partner.”
Lovelock also warned of ongoing "CIO team fatigue" and said: "The change fatigue in CIOs that we saw at the start of the year has now abated and the contract backlogs going back to the third quarter of 2023 are being cleared. We expect to see a larger rush towards the end of the year to make up for the slow start."
