European cloud spending will reach $148 billion this year
According to the International Data Corporation (IDC)’s Worldwide Software and Public Cloud Services Spending Guide, Public Cloud Services spending in Europe will reach $148 billion in 2023 and will reach $258 billion by 2026, growing at a 22% 5-year 2021-2026 CAGR.
Being a cost-effective substitute to traditional IT deployments, Software-as-a-Service (SaaS) will continue to drive most of the spending in Public Cloud in Europe, especially during challenging times when companies are heavily scrutinizing their budgets. On the other hand, companies are looking for tools that enable reduced speed to market and that allow them to speed up the creation of apps. Consequently, Platform-as-a-Services (PaaS) will remain the fastest-growing Cloud segment in the future.
Professional services, banking, and discrete manufacturing will remain the top spending industries in Public Cloud Services, absorbing 36% of the overall Public Cloud Services spend in 2023. The situation in Europe remains tense for the Cloud market, which finds itself in the middle of a tug of war-alike effect. On one hand, high inflation, cost crisis, energy prices, and geopolitical tensions in Eastern Europe will intensify budget volatility and change IT plans. On the other hand, a stronger focus on cost-effective IT solutions, hybrid work, digital transformation acceleration will push investments in the Cloud, which will continue to grow.
“As the direct effects of the pandemic phased out, its indirect effects morphed into new challenges including skill shortages, high inflation, and potential recession scenarios, which will influence investments in technology. Nonetheless, the Cloud focus will march on, with companies using Cloud to lower IT costs. European industries will more frequently shift efforts toward Cloud solutions that require lower capital expenditure than traditional IT solutions.” said Andrea Minonne, research manager at IDC UK.
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