Europe’s expenditure on public cloud services is projected to surge to $171 billion in 2024 and $298 billion by 2027, the International Data Corporation (IDC) said.
The report forecasts a robust compound annual growth rate (CAGR) of 21 percent over the five-year span from 2022 to 2027. The driving force behind this growth is attributed to the burgeoning interest in Platform-as-a-Service (PaaS), fueled by the burgeoning excitement surrounding generative AI (GenAI), consequently propelling investments in cloud-based AI software services.
Poland is expected to lead cloud spending growth in Europe, buoyed by a more favorable economic landscape characterized by an uptick in real disposable income, mitigated inflation rates, augmented nominal wages, and heightened social benefits.
United Kingdom lags at the bottom of the list, with sluggish cloud spending growth attributed to a volatile economy, persistently higher inflation rates compared to its European counterparts, and the declaration of a recession in the latter half of 2023.
Andrea Minonne, the research manager at IDC U.K., remarked, “Despite macroeconomic challenges, cloud spending will continue to grow across all industries, supported by strong drivers such as GenAI, CloudOps, digital sovereignty, and sustainability. As the economy remains volatile, it’s important for cloud providers to stay on top of industry trends by understanding the dynamics and priorities of different vertical markets.”
The oil & gas sector emerges as one of the frontrunners in terms of cloud spending in 2024. This surge is correlated with the robust profits attained by the industry since the commencement of the conflict in Ukraine, thereby influencing the IT budgets of oil & gas companies and their capacity to execute innovation projects.
Banking, retail, and telecommunications sectors retain their positions as top spenders in public cloud services in 2024, collectively contributing to almost a third of the market’s overall value.
Looking ahead to the long term, software and information services are poised to achieve the highest value CAGR in Europe, pegged at 25 percent over the five-year horizon. Despite lingering challenges in the tech sector, GenAI emerges as a pivotal focal point driving cloud investments.
By harnessing the capabilities of GenAI, tech enterprises stand to streamline processes expeditiously and efficiently, thereby bolstering the existing workforce and facilitating a greater allocation of time toward strategic initiatives, IDC said.
