Digital Transformation Spending Expected to Reach $3.9 Trillion by 2027, Reports IDC

A recent report from the International Data Corporation (IDC) reveals that global spending on digital transformation (DX) is poised to surge, reaching nearly $3.9 trillion by 2027, driven by a robust compound annual growth rate (CAGR) of 16.1 percent over the next five years.
Digital Transformation Spending Forecast IDCThe IDC’s Worldwide Digital Transformation Spending Guide underlines the worldwide shift towards digital transformation, with a particular focus on geographical distribution. In 2023, the United States is expected to account for 35.8 percent of worldwide DX spending.

Remarkably, this figure is closely matched by the Asia/Pacific region, which includes Japan and China, contributing 33.5 percent to the global DX spending. The Europe, Middle East, and Africa (EMEA) region is projected to deliver 26.8 percent of worldwide DX spending in the same year.

In Europe, the pace of digital transformation spending is accelerating, with an estimated CAGR of 16 percent from 2023 to 2027.

Angela Vacca, Senior Research Manager, Data and Analytics, Europe, noted, “The fastest growing geography will be the Nordics, where Financial Services and Telecom/Media companies will be the most dynamic, growing their DX spend by more than 20 percent across the forecast period.”

In the Asia/Pacific region, digital transformation has taken center stage, driven by a shift away from traditional business models.

Mario Allen Clement, Associate Research Manager for the Asia/Pacific IT Spending Team, explained, “Customer Experience, Innovation, and Efficiency are leading to business models that are boosting both productivity and profitability for businesses. Integration of multiple 3rd Platform technologies such as Cloud Computing and Artificial Intelligence coupled with a need to cater to real-time customer experience will continue to push investments further across industries with specific use cases as priorities in the Asia/Pacific market.”

The report identifies several key areas where digital transformation investments are concentrated, including:

Innovate, Scale, and Operate: Focused on improving operational efficiency, including supply chain management, engineering, design, research, and manufacturing plant operations. This represents the largest use case.

Back-Office Support and Infrastructure: Encompassing functions like accounting, finance, HR, legal, security, risk, and enterprise IT.

Customer Experience: Enhancing customer-related functions, such as customer services, marketing, and sales.

360 Degree Customer and Client Management: Improving engagement and experience throughout the customer journey.

The report also highlights the fastest-growing DX use cases, such as Mining Operations Assistance, Robotic Process Automation-Based Claims Processing, and Digital Twins, with impressive five-year CAGRs of 32.6 percent, 30.6 percent, and 28.5 percent, respectively.

The discrete manufacturing sector leads the way in DX spending, accounting for roughly 18 percent of all investments worldwide. Other top industries in terms of DX spending include Professional Services and Process Manufacturing. The Securities and Investment Services industry is expected to experience the fastest growth, with a five-year CAGR of 21.1 percent, followed by Banking and Insurance at 20 percent and 19.2 percent, respectively.