Digital transformation (DX) spending worldwide is set to approach $4 trillion by 2027, according to the latest forecast from market intelligence firm International Data Corp. (IDC). Fueled by advancements in artificial intelligence (AI) and generative AI (GenAI), the DX market is expected to grow at a compound annual growth rate (CAGR) of 16.2% from 2022 to 2027.
As digital initiatives become a top priority, DX investments could account for up to two-thirds of all Information and Communication Technology (ICT) spending by 2027, IDC finds.
“Digital transformation is no longer a discretionary investment: companies that want to be competitive and win in the digital economy are leading the way,” said Angela Vacca, senior research manager with IDC’s Data & Analytics Group.
Vacca also noted that today, DX spending represents a bigger market compared to the non-DX portion of ICT spend. Digital business investments are ramping up even faster with the advent of GenAI which is having an impact across industries.
“Still, opportunities are varied across different market spaces,” she said.
Based on IDC’s data, the financial services sector is experiencing rapid growth with a five-year CAGR of 20.5%, driven by three leading use cases. Robotic Process Automation-Based Claims Processing is the fastest-growing use case with a CAGR of 35.1%, followed by Real-time Financial Advice (29.5%) and Digital Banking Experience (29.3%). These use cases, heavily reliant on AI and data analytics, are reshaping financial institutions into more efficient, customer-focused entities capable of swiftly adapting to market changes.
AI use cases
Discrete Manufacturing is projected to see the largest DX investments, with global spending nearing half a trillion dollars in 2024 and growing to over $700 billion by 2027. Key strategic priorities in this sector include Omni-Experience Engagement and Sustainability, both of which are rapidly gaining traction.
Regional growth highlights include Latin America and China, with five-year CAGRs of 17.9% and 17.4%, respectively.
“China is entering a new era of AI-driven digital transformation, supported by favorable policies,” said Jing Qian, market analyst at IDC’s Data & Analytics Group China. “Chinese businesses are leveraging advanced technologies to enhance productivity, intelligence, and sustainability.”
The advent of GenAI AI presents both opportunities and challenges. IDC emphasized the importance of strategic partnerships with vendors to navigate these challenges.
“To remain competitive and innovative, organizations must effectively utilize generative AI’s benefits and avoid missed opportunities due to uncertainty,” said Mariya Yahnyuk, research analyst at IDC’s Data & Analytics Group.