Most companies will increase IT spending in 2025. But there's a twist in the tale

The coming year will be a boom time for IT projects, but the impact depends on where you sit. Companies plan to increase tech investments to respond to business challenges or to fund new initiatives. However, these same organizations will be sizing budgets and balancing spending through strategic tech cost-cutting measures.

That is one of the findings from a new survey of 803 IT professionals, released by Spiceworks and Aberdeen Strategy and Research, conducted in July and August 2024. Spiceworks and Aberdeen are part of Ziff Davis, publisher of ZDNET. 

Also: Looking to lead technology teams in 2025? Follow this CDO’s advice

The study, The State of IT Jobs in 2025, suggests the overall outlook is good. At least 43% of executives said their businesses intend to increase IT staff size compared to 32% two years ago. This year, only a handful of respondents (6%) mentioned decreasing IT staff sizes.  

Most employers (57%) said they have trouble finding employees with the required expertise and potential candidates aren’t very confident in some in-demand IT skills. IT talent gaps were most pronounced in cybersecurity, data analysis, scripting/coding, and conflict resolution. Looking to the future, confidence in artificial intelligence (AI) skills was also low at 57%.

Also: AI spending to reach $632 billion in the next 5 years, research finds

Overall tech budget growth is expected to accelerate in 2025. Nearly two-thirds (64%) of companies said they plan to increase their IT budgets in 2025 and just 4% plan to decrease budgets. Areas that will see the most growth year over year include generative AI software (54%), security solutions (52%), and laptops (47%).

The top driver behind technology budget growth was increased security concerns, influencing 53% of organizations that plan to raise spending in 2025, up from 41% in 2023, and 48% in 2024. In many cases, these budget increases are intended to help the business stay on track. Factors contributing to rising IT spending include increased priority on IT projects (47%), the need to update infrastructure (45%), employee growth (45%), and inflation (45%).

Also: 5 ways to inspire people and create a more engaged, productive team

The survey also reported that 47% of organizations plan to increase laptop spending in 2025, with Windows 10 end-of-service in October 2025 and laptops purchased during the pandemic-driven rush to support remote workers now more than four years old.  

Interestingly, IT automation ranked first as the technology considered the best investment for money, cited by over three-fourths (76%) of respondents. Another 72% said gigabit Wi-Fi is well worth the investment. More than two-thirds (68%) said they see value in AI and edge computing. Even Blockchain received high marks among 64%.

AI looms large as an essential skill area. “Over the last two years, artificial intelligence has been perhaps the hottest buzzword in tech,” said Peter Tsai, head of technology insights with Spiceworks. 

“AI has made its way into seemingly everything, including operating systems, security solutions, communications technologies, myriad business applications, and more. One of the key insights from the report reveals 54% of companies plan to increase spending on generative AI technologies — such as ChatGPT — in 2025.”  

Also: AI transformation is the new digital transformation. Here’s why that change matters

However, there’s also a twist in the results — companies plan to streamline costs aggressively in 2025. The vast majority (92%) of companies intend to implement some form of cost savings relating to people, processes, or technology, with an average of four measures planned per organization. 

“While overall IT spending is expected to grow at a healthy 9% year over year, IT departments will simultaneously seek to drive efficiencies in 2025, whether through cost-cutting measures or adopting new technologies that address challenges, enable new initiatives, or reduce risk,” said Tsai. To some degree, he added, “it’s a fairly standard practice in large businesses, to look for efficiencies, to look for unused seats and identify products that are never used.” 

Respondents said leading tech-centric cost-saving measures that are most likely to be implemented include decommissioning unnecessary infrastructure (38%), re-evaluating current vendors or contracts (37%), adopting solutions that automate tasks or improve efficiency (34%), and consolidating redundant technologies (29%). In addition, 28% of businesses said they plan to put future IT projects on hold.

Tsai was struck by the different views of IT staff and senior leaders. “When I unveiled the 2025 State of IT data at SpiceWorld, in Austin, many IT professionals said the data showing a disconnect between IT staff and IT management resonated with them,” said Tsai. 

“For example, most IT staff, 54%, believe their company is not spending enough to support its technology needs, while most hiring managers believe they’re spending either enough or more than enough. IT staff are also two times more likely to be concerned about wages not keeping up with the cost of living and teams being asked to do more with less than senior management.”

Also: Gen AI gives software developers surge in productivity – but it’s not for everyone

Tsai added that a key takeaway from this data is that leadership should understand the pressures their reports face: “Listen to them. They understand which technologies are worth investing in.”

At the same time, the report suggested greater skepticism among younger IT professionals — Millennials and Gen Z — about the value of AI. “Senior leaders are more likely to say it’s worth it,” said Tsai. “Their staff is less inclined to see the value. They have a hesitancy, and maybe even a fear of being replaced.”

Over a third (36%) of IT managers and professionals expressed plans to seek a new employer in 2025. Younger IT professionals are much more likely to try to switch roles within the next year — more than half (53%) of those born in 1997 or later plan to look for a new job in 2025, compared to 42% of Millennials, 32% of Gen X, and 15% of Boomers.

Also: The secret to successful digital initiatives is pretty simple, according to Gartner 

The report suggested the most important IT career skills include core technical knowledge, problem-solving, cybersecurity, written and verbal communication, and team collaboration. However, despite cybersecurity being one of the most important technical IT skills (90% of respondents said it’s important or very important), only 63% said they’re very or extremely confident in their security knowledge, revealing a significant skills gap.