Global enterprise technology spending is set to grow by 5.6% in 2025, reaching $4.9 trillion, as enterprises continue to prioritize investments in cybersecurity, cloud computing, generative AI, and digital transformation.North America and the Asia-Pacific region are projected to be the fastest-growing markets, while software and IT services are projected to account for 70% of all global technology spending by 2029, according to a Forrester report.Despite geopolitical instability and a softening IT and telecom services market in 2024, technology investments remain resilient, said the report titled Global Tech Market Forecast, 2024-2029.While certain sectors of the IT and telecom services market are showing signs of slowing down, businesses are accelerating their adoption of AI-driven tools and cloud-based solutions to enhance productivity and efficiency.Over the next five years, technology investments will reshape industries at an unprecedented pace, Michael OGrady, principal forecast analyst at Forrester said in the report. GenAI, cloud technologies, and cybersecurity will take center stage, transforming how businesses operate and deliver value.OGrady further said that companies that prioritize these investments will not only strengthen their competitive edge but also achieve sustainable growth, but its important that they also balance their rapid tech investments with ongoing efforts to manage legacy systems and reduce technical debt.Software and AI investments fuel growthForrester projects that software spending will grow by 10.5% in 2025, making it the fastest-growing category within the global tech market. Enterprise investments in AI, cloud computing, and cybersecurity are expected to drive long-term expansion, with businesses increasingly shifting toward SaaS-based models.Software will comprise 37% of global technology spending by 2029, nearly doubling its share from 2016, the report noted.The balance between AI hype and enterprise adoption is stabilizing as businesses focus on practical, ROI-driven applications, said Charlie Dai, VP and principal analyst at Forrester.He noted that while AI spending continues to grow, its measurable benefits are now evident in areas such as document automation, customer service, and employee augmentation. Success depends on clear use cases, integration, and managing expectations, ensuring investments align with tangible business outcomes, Dai said.The report further added that with the demand for AI-driven infrastructure rising rapidly, AI server and storage markets are expected to see a 13% annual growth rate through 2030. OpenAIs annualized revenue has already surged to $3.4 billion, up from $1 billion in mid-2023, highlighting the increasing adoption of generative AI solutions in enterprise environments.This trend reflects broader corporate interest in AI-powered automation, which is transforming industries ranging from healthcare and finance to manufacturing and retail.Cloud transformation on the riseThe IT services sector is expected to grow by 3.6% in 2025, as businesses continue to rely on consulting, IT outsourcing, and infrastructure-as-a-service (IaaS) to modernize their operations. The shift from traditional capital expenditures to operating expenditures through cloud-based services is accelerating, as enterprises seek more scalable and cost-effective solutions.Dai noted that while many industries are shifting to an opex model for flexibility and scalability, a hybrid approach will persist. He explained that sectors such as manufacturing and utilities will likely continue investing in capex for critical, long-term infrastructure, whereas tech-driven industries will favor opex-based cloud solutions.Cost control, regulatory requirements, and strategic asset ownership will drive this decision, he said.IaaS is poised for substantial growth, with a projected compound annual growth rate of 16% through 2028. This expansion is being driven by enterprises migrating workloads to major cloud providers, including Microsoft Azure, AWS, and Google Cloud, the report added.These investments are expected to improve operational agility, reduce infrastructure costs, and enhance security resilience in an increasingly digital business landscape.Europe faces challengesAccording to the report, technology spending trends vary significantly by region, with North America and Asia-Pacific expected to see the strongest growth.North America is projected to experience a 6.1% increase in tech spending, with AI investments in financial services, retail, and media leading the way. Businesses in the US and Canada are accelerating cloud migration and cybersecurity initiatives, positioning the region at the forefront of enterprise IT innovation.The Asia-Pacific region is forecasted to grow by 5.6%, with China, India, Japan, and Malaysia emerging as key drivers of expansion. India, in particular, is expected to have the regions fastest-growing tech spending CAGR of 9.6% from 2024 to 2029, fueled by investments in AI, cloud, and digital transformation initiatives. The regions investments in AI and semiconductor technologies continue to support enterprise adoption of next-generation computing solutions.Meanwhile, Europes tech market is expected to grow at a slower rate of 5%, as economic challenges in Germany and Italy dampen enterprise spending.Charlie Dai pointed to fragmented regulations, stricter data privacy laws, and higher operational costs as key barriers to faster enterprise IT growth in Europe.He explained that cultural diversity and varying levels of digital maturity across countries further complicate scaling efforts for technology providers. Europe faces slower enterprise IT growth due to fragmented regulations, stricter data privacy laws, and higher operational costs, he said.Latin America and the Middle East are also witnessing steady growth, with tech spending in these regions projected to rise between 5.2% and 5.4%. Governments and telecom operators are leading digital transformation efforts, with cloud adoption and AI integration playing a crucial role in modernizing public services and business operations.Enterprise takeaways and strategic considerationsFor enterprises, the forecast highlights several key takeaways that will shape IT investment strategies in the coming years. The growing dominance of cloud and AI-driven technologies is compelling organizations to rethink their approach to IT spending. Cybersecurity remains a top priority, with leading firms such as Palo Alto Networks forecasting a 16% revenue increase in 2024, reflecting heightened enterprise demand for advanced security solutions.Enterprises should prioritize a zero-trust strategy, integrating cybersecurity and compliance into every stage of AI and cloud adoption, Dai said, adding that enterprises must rethink their IT investment strategies by integrating cybersecurity and compliance into every stage of AI and cloud adoption.At the same time, organizations must navigate the challenges of modernizing legacy IT infrastructure. While cloud adoption is accelerating, two-thirds of global IT budgets are still allocated to maintaining existing systems. This underscores the complexity of balancing innovation with managing costs, ensuring compliance, and mitigating security risks. The evolving regulatory landscape around AI and data protection is further influencing how enterprises deploy new technologies while safeguarding customer trust and operational integrity. With enterprises expected to spend nearly $5 trillion on technology in 2025, the decisions made today will have a lasting impact on business resilience and digital competitiveness.