Forrester tips cloud & generative AI to fuel IT boom

Forrester expects global spending on IT services to grow at a 4.8% compound annual growth rate from 2024 to 2029, with cloud and generative AI listed as key demand drivers.

The forecast covers a broad set of technology-related services sold to enterprises. It includes consulting, managed services, cloud infrastructure, application development and digital transformation work. It also includes newer activity in generative AI-enabled automation, cybersecurity services and sector-specific offerings.

Forrester said its market view includes Infrastructure as a Service, which it described as a major contributor to growth. The firm also pointed to demand across financial services, manufacturing, energy and the public sector.

Cloud demand

Within cloud, Forrester projected Infrastructure as a Service growth at a 21.9% compound annual growth rate through 2030. It said this was twice the rate of software growth.

In the Asia-Pacific region, the forecast cited demand signals from large IT services providers and enterprise buyers. Forrester said Indian IT services groups such as Tata Consultancy Services and Infosys had reported strong demand for sovereign cloud. It also said Australian enterprises were accelerating hybrid cloud adoption, with compliance and scalability cited as factors in buying decisions.

Generative AI

Forrester linked IT services growth to wider interest in generative AI programmes inside large organisations. It said generative AI work already featured in cloud migration and automation projects for some large services vendors in India.

The forecast referenced a separate expectation from Goldman Sachs on adoption in China. It said Goldman Sachs expected 10% to 20% of Chinese enterprises to adopt generative AI by 2030.

Forrester also described a different focus among buyers in Singapore. It said Singapore-based firms were prioritising AI-driven cybersecurity and compliance.

Sector spending

Financial services and the public sector featured prominently in Forrester's regional commentary. It said banking and insurance buyers in Asia-Pacific were investing in technology modernisation programmes. It cited regulatory compliance requirements and technology obsolescence as issues that influenced spending.

Forrester also pointed to defence and public sector projects in Australia and Singapore. It said these projects were exploring generative AI for operational efficiency and decision-making.

Deal activity

The forecast described mergers and acquisitions as another factor shaping growth among large IT services providers. It said Accenture captured nearly 50% of its 2024 revenue growth through acquisitions.

Forrester said Capgemini expanded its footprint in Asia via WNS Holdings. It also highlighted NTT DATA, which it said delivered the fastest IT services growth among the top 20 providers. Forrester attributed that growth to demand for digital transformation and AI services.

Pricing shifts

Forrester said generative AI work already influenced how IT services vendors in Asia-Pacific approached delivery and commercial models. It said vendors were shifting toward outcome-based and asset-based pricing. It also said vendors were automating lower-value tasks.

The firm also cited investment in areas it described as niche. It listed sustainability and technology sovereignty among those areas.

Forrester referenced workforce training claims from major providers. It said Infosys had trained 85% of its workforce, which it quantified as 275,000 employees, in AI and generative AI. It said Tata Consultancy Services reported that 70% of its workforce had foundational generative AI skills.

Michael O'Grady, Principal Forecast Analyst, Forrester, said the market faced structural change driven by generative AI and cloud adoption.

"The IT services market is entering a transformative era", said Michael O'Grady, principal forecast analyst at Forrester. "Generative AI and cloud are not just incremental technologies-they are redefining how enterprises operate, compete, and deliver value worldwide. Our forecast shows that firms embracing AI-driven efficiencies, sovereign cloud strategies, and outcome-based pricing models will be more likely to thrive. For business leaders, the imperative is clear: invest in scalable AI use cases, strengthen data governance, and build partnerships that accelerate innovation."

Forrester's forecast sets out a growth trajectory through 2029, with cloud infrastructure services and generative AI work likely to remain prominent lines of spending for large enterprise buyers and public sector organisations.