Software Spending Set to Hit ~$1.24 Trillion in 2025
Businesses worldwide are ramping up their software investments as part of broader digital upgrades and generative-AI rollouts. According to Gartner’s latest forecast, software spending alone is expected to reach approximately $1.24 trillion in 2025, up from ~$1.09 trillion in 2024 — a rise of about 14%. The spike matters for enterprises, software vendors and investors alike, as it underscores both the scale of transformation underway and the opportunity it presents.
Background / Context
Over the past few years, IT budgets have increasingly tilted toward software rather than hardware. Cloud applications, SaaS subscription models and enterprise digital-transformation programs have become mainstays. In January 2025, Gartner noted that worldwide IT spending would hit $5.61 trillion with software being among the fastest-growing segments.
The driving forces include increasing adoption of generative AI, remote-first work habits, and the need for scalability and agility in software platforms. As organisations migrate legacy systems, their software spending has shifted both in magnitude and focus.
Key Developments / Details
According to Gartner’s January 2025 update, the software segment is projected to grow 14.2% in 2025 from 2024, taking software spending from about $1,091.6 billion in 2024 to roughly $1,246.8 billion in 2025.
In a breakdown by CRN, that projection also appears as software reaching ~$1.24 trillion in 2025, emphasising that software growth is outpacing many other IT segments.
Gartner’s analysis points out that generative AI (GenAI) is a key enabler, but CIOs also caution that much of the spending is on recurrent software, subscriptions and infrastructure tied to digital workflows rather than purely on new projects. “While budgets for CIOs are increasing, a significant portion will merely offset price increases within their recurrent spending,” noted Gartner’s John-David Lovelock.
Technical Explanation
In simpler terms: When companies say they are spending more on “software”, this means more than just buying new licenses. It covers cloud-based platforms, SaaS subscriptions, AI-first tools, platforms that support remote work, automation modules and also upgrades to existing software stacks.
When Gartner says “software spending will reach ~$1.24 trillion”, it’s the total money organisations globally allocate to acquiring, maintaining and upgrading software products and services in that year. The growth rate of ~14% indicates that companies are spending not just because they need new software, but also because they are upgrading, replacing or scaling what they already have.
Implications
For software vendors, this is a strong tailwind — demand is high and budgets are available. Companies that offer SaaS, AI-embedded software or platforms for digital transformation are well-positioned.
For enterprises, the emphasis on software means that the next horizon of competitive advantage lies in how well they select, integrate and manage software ecosystems. It also means greater reliance on vendor relationships, software skills and governance.
For investors, the software segment remains a key growth area in tech, and the $1.24 trillion figure gives scale and validation to the hype around digital transformation and AI-powered business models.
Challenges / Limitations
While growth is strong, some caveats remain. Gartner points out that part of the increase is driven by price inflation rather than purely volume or strategic upgrades.
Additionally, rising software spend doesn’t always translate to improved outcomes — companies may struggle with integration, deferred projects or skill gaps. Finally, macro-economic uncertainty and geopolitical risk could still pressure discretionary software projects even amid high aggregate spending.
Future Outlook
Looking ahead, software spending growth may continue beyond 2025, particularly as AI deployment, edge computing and industry-specific SaaS gain traction. Gartner expects overall IT spending to go well beyond $6 trillion in 2026, with software remaining a major chunk.
Organisations will increasingly shift from “buying software” to “leveraging software-driven services” and embedding AI, workflows and analytics directly into business operations. This means the next wave of software spend may focus less on standalone products and more on continuous service, integration and value-creation.
Conclusion / Summary
The software market is poised for robust growth in 2025, with spending approaching $1.24 trillion. This reflects not just bigger IT budgets but a deeper shift toward software-centric business models. As the software economy expands, how effectively organisations harness that spending will likely determine competitive advantage and digital maturity.
OUR TAKE
This milestone reminds us that software is no longer a cost centre — it is a strategic investment engine. As spending approaches trillion-dollar scale, the winners will not be those who simply buy software, but those who turn it into business outcome, agility and insight.