In this context, TechMarketView has introduced the term ‘GenAI Dividend’ to describe the additional growth in the UK Software and IT Services (SITS) market driven by the preparatory work needed for large-scale generative AI adoption. According to the firm, this trend is expected to inject up to £5 billion in net new Software and IT Services spending from 2024 to 2027.

Georgina O’Toole, Chief Analyst at TechMarketView, said: “The biggest impact in the near term of the so-called GenAI revolution will be organisations investing in prepping their digital and data foundations to ensure they can leverage and optimise their GenAI investments in the future. And the truth is, the vast majority are far from ready today.”

Having hit 12.2% growth in 2022, the UK SITS market slowed to 6.9% in 2023, with expansion forecast to slow even further to 5.3% in 2024. Furthermore, 2023 was heavily inflation-fuelled and in real terms the market did not grow at all.

Through to the end of the forecast window in 2027, however, underlying growth will improve. Cloud platform will remain one of the most notable growth drivers in the market – in part due to it being one of the most significant beneficiaries of the ‘GenAI Dividend’ – propelling the continued strong fortunes of the hyperscalers (Amazon Web Services, Microsoft, and Google Cloud Platform).

However, O’Toole cautioned: “We do not expect huge levels of spend on GenAI-centric deployments per se – quite the opposite. In 2024, TechMarketView estimates that less than 1% of the UK SITS market will come from such projects and programmes. By the time we hit 2027, that figure will have crept up to mid-single digits.”