Generative AI to Propel MENA IT Spending to $231 Billion by 2025

The Middle East and North Africa region is set to witness the most dramatic growth in MENA IT spending. According to estimates, MENA may spend as high as $230.8 billion in IT expenditure by 2025, which will grow at a CAGR of 7.4% against the previous year’s levels but will reflect the hunger for advanced technologies, such as generative artificial intelligence, that will sharply drive this increased demand.

As per the recent study conducted by Gartner, software expenditure in MENA is also likely to touch nearly $19.98 billion by 2025, having recorded a consumption growth annual rate of 13.7 %. Much of this growth results from CIOs concentrating resources on GenAI investments, while artificial intelligence and cloud service investment levels are rising. Such technologies will redefine infrastructure, software, and services in the region, enabling companies to configure them to GenAI, whose use is generalizing.

IT spending will also grow worldwide, from $5.12 trillion in 2024 to $5.61 trillion in 2025. This 9.8% increase in spending on IT worldwide is similar to the trend in the MENA area. Thus, there is a larger transition to spending on technologies across industries.

John-David Lovelock, Vice President Analyst at Gartner, points this out: The growth will not greatly add to the increases in CIO budgets since it is also believed that most of the increased capital will be nullified by rising costs. As increasing prices continue to permeate most major IT categories, CIOs are expected to cut or postpone some budget plans as they readjust to an increasingly grueling cost scenario.

More than 70% would still be going to IT service providers and hyperscalers for IT expenditure in MENA. These hyperscalers are taking on forms new to them and becoming some of the major players in the AI “industry” away from previous models. Federal and private investments driving this change are dynamic to research and development in digital infrastructure as well as workforce development.

Among the various sectors, data center systems are likely to experience the fastest annual growth rate, which has been forecast to be about 14.9% in the year 2025. This performance is influenced by the need for innovations in Artificial Intelligence, improvements in storing data, and the increased utilization of cloud services.

It will be important for MENA CIOs as they refine their GenAI strategies to align AI investments with business goals while continuing investments in literatures of the workforce toward exploiting these technologies. Meanwhile, growth in spending on devices will be more conducive at a global level as it slows to just 6.1% in 2010.

The region is poised at the threshold of an IT spending revolution that will be sustained by commitment for innovative development, cybersecurity, and AI technologies. The MENA region has also made heavy investments in digital transformation; thus, it is positioning itself to be a global leader in tech.