A new study from International Data Corporation (IDC) reveals that spending on digital transformation (DX) in the Europe, Middle East and Africa (EMEA) region is expected to reach $1,201 billion by 2028, with a compound annual growth rate (CAGR) of 15.8% from 2024 to 2028.
This accelerated growth is largely driven by increased investments in artificial intelligence (AI), particularly in generative AI (GenAI). According to the IDC Global CEO Survey (February 2024, EMEA), 99% of CEOs in the region prioritize generative AI initiatives, highlighting the importance of this technology in business strategy.
“AI is redefining digital business models and reshaping digital assets. By 2027, AI-driven companies will be the norm, accelerating the evolution of digital transformation and generating immersive experiences along with new operational models,” says Erica Spinoni, senior analyst at IDC for digital transformation and AI strategies in EMEA.
The impact of technology on digital spending
Investments in digital transformation encompass a wide range of technologies, from robots, connectivity, cloud computing, to IoT devices and IT services. IDC classifies these technologies into three growth groups:
- Stable growth: personal devices and connectivity services.
- Growth aligned with digital transformation: IoT and IT services.
- Accelerated growth above digital transformation: generative AI, cloud computing, and emerging technologies like augmented reality (AR) and virtual reality (VR).
“Companies must invest in multiple technologies to transform their business and operational models. Generative AI has emerged as the primary driver of digital investment, even surpassing cloud computing, with a CAGR four times greater than the overall digital market,” explains Giulia Carosella, research manager at IDC EMEA.
Sector impact of digital transformation
Each industry adopts digital transformation according to its specific priorities and needs:
- Financial services: The sector with the highest growth rate in the forecast period, with a strong focus on cybersecurityCybersecurity solutions are essential in the era of digital transformation. and customer experience, powered by AI.
- Distribution and services: Despite geopolitical tensions affecting the supply chain, the sector maintains strong investments in digital platforms and AI-centric use cases to enhance consumer experience.
- Infrastructure: With a high degree of digital maturity, this sector continues to invest to strengthen its competitiveness in the AI era.
- Manufacturing and resources: AI and generative AI are driving automation and increasing labor productivity, creating new growth opportunities.
- Public sector: While budget constraints force a prioritization of investments, the use of emerging technologies continues to expand, with a particular focus on service digitization and operational efficiency.
“Digital transformation is not only a growth engine for strategic sectors but also a key tool for optimizing costs and improving processes. These advantages will contribute to maintaining double-digit growth for DX in the coming years,” notes Angela Vacca, research manager for data and analytics at IDC.
Factors driving and limiting digital investment
Growth drivers
- AI and generative AI as a strategic priority for organizations in EMEA.
- Regulations and cybersecurity, which require investments in trusted digital infrastructure.
- Opportunities for leadership and competitive advantage in the adoption of emerging technologies.
Investment barriers
- High costs and uncertain returns, forcing careful evaluation of each project.
- Geopolitical and macroeconomic tensions, affecting IT budget allocation.
- Lack of digital talent and organizational silos, hindering effective digital transformation.
“AI and GenAI are not just technological advancements; they represent strategic imperatives for companies in EMEA. However, economic uncertainty and a shortage of digital skills are making widespread adoption challenging,” warns Erica Spinoni.
Conclusion
The IDC report EMEA Digital Transformation Market Forecast, 2024–2028 provides a comprehensive view of market growth and the strategic relevance of digital transformation in the region, driven by massive investments in artificial intelligence, cloud computing, and emerging technologies.
To access the full report and learn more about technology trends in EMEA, visit IDC.