Information technology (IT) continues to be an exciting and innovative industry, with new technologies and trends continually emerging. In this industry report, we offer an overview of the global IT market landscape in 2024. Below, we also include insights into the latest trends, opportunities, risks, key players and rising stars for investors to consider. We hope these insights are useful. Please get in touch for more information or to explore our early-stage investment opportunities in technology.
Market Overview: IT
Traditionally, the definition of IT has concentrated heavily on hardware – i.e. the use of computers and electronic infrastructure to store, process and network data. In 2023, the global IT industry was valued at $8,508bn USD and is expected to reach $9,039 USD by the end of this year. By 2028, the industry could reach $12,417bn USD, representing a compound annual growth rate (CAGR) of 8.3%.
The IT industry can be subdivided into various segments, including type (e.g. IT services, telecoms), organisation size (small, medium or large) and end-user (manufacturing, healthcare and financial services). North America retains geographical dominance for IT innovation, with the US hosting many tech giants and startups. However, in 2023, the Asia-Pacific region surpassed North America as the world’s largest IT market.
Key trends
Across industries, digital transformation initiatives are driving significant growth in IT. Increasingly, businesses are looking to modernise their processes, retain competitiveness online and enhance their customer experiences. Airports, for instance, are seeking to improve their passenger check-in processes. Self-check-in kiosks are proliferating, and facility-wide internet access (including mid-flight WiFi) is becoming more commonplace.
Many firms also want to gain market share via innovation, leveraging new IT-reliant technologies such as artificial intelligence (AI), machine learning and data analytics to gain an edge over rivals. Older hardware and IT services will struggle to meet this demand, requiring faster and more efficient computers to handle increasingly complex data tasks.
Key players and new entrants
The world’s largest IT companies largely come from the USA and Japan, including NTT Data, Imergex Information Technology Inc., Microsoft, Intel, AT&T, Apple, and Fujitsu. For many years now, large IT firms have enjoyed dominance in their respective markets due to economies of scale (particularly technological ones), enabling them to erect high barriers to entry for potential new entrants. However, the rise of new technology is changing this picture.
A notable example is edge computing. Here, data collection and processing occur closer to the source and “feed” into a chain of interconnected devices. The goal is to reduce latency and enhance real-time decision-making. This is the perfect space for startups to advance their niche value propositions to customers, integrating with existing hardware and IT infrastructure offered by established IT players.
An interesting case study is Proxus; a 2023 startup that has championed the idea of industrial data collection. Data is collected via edge devices (sensors, machines, PLCs, databases etc.) across multiple facilities to enhance real-time decision-making during the manufacturing process. Another example is Rollyy, which has carved its name by advancing autonomous robots designed to charge electric vehicles (EVs). Also established in 2023, Rollyy offers fleet operators lower operating costs and better real-time monitoring. The firm offers solutions in electric mobility, charging infrastructure development and urban planning for smart cities.
Risks & opportunities
We have already mentioned two key drivers of growth in the global IT industry (digital transformation and competitive innovation). A third driver is rising cybersecurity concerns amongst firms in almost all verticals. Cyberattacks seem to be rising in frequency and harmful potential, raising firms’ awareness of the need for secure IT infrastructure, reliable threat detection systems and effective cybersecurity measures.
Population growth, urbanisation and shifting consumer preferences are also playing key roles in driving IT growth. For example, the rising middle class in Asia-Pacific markets, such as China and Vietnam, is leading to increases in disposable income for normal luxury goods as as PCs, laptops and smartphones. Vietnam’s urban population is also expected to surge by 10m over the next 10 years, likely driving further IT demand as authorities seek to manage resources efficiently and create healthier urban environments.
However, there are constraints on global IT growth. One is an ongoing skills shortage as organisations seek experienced IT professionals who are knowledgeable in emerging technologies (e.g. data management). Naturally, talent shortages create problems such as higher labour costs, delays in project deliverables and difficulties when trying to implement complicated IT solutions.
IT is also notorious for having high initial investment costs. These create significant barriers for new entrants, requiring large capital to develop and install IT solutions – especially for large-scale projects. Certain areas of IT can also suffer from intermittency and reliability issues (e.g. those in renewable energy sectors, such as wind and energy). Infrastructure investments can also hold back expansion plans, such as upgrades to grid and storage facilities. Finally, there can also sometimes be policy uncertainty, such as changes to subsidies and tax incentives, leading to instability for investors.
Invitation
IT remains an interesting and dynamic area of investing. The nuances of the industry (and its various segments) require a thoughtful and strategic approach by investors to ensure strong diversification and due diligence.
If you are interested in expanding your portfolio into these exciting spheres of investing, then get in touch with us here at Bure Valley and consider joining our exclusive investor network:
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