Spending on worldwide public cloud services is expected to reach US$219 billion by 2027, according to new data from IDC, benefiting cloud leaders Amazon Web Services, Google Cloud and Microsoft.

The market research firm said spending on public cloud services will continue to grow by billions of dollars annually over the next three years as customers of all shapes and sizes increasingly adopt cloud environments due to their agility, scalability and cost-effectiveness.

“The demand for data analytics, cybersecurity and AI solutions drives cloud adoption,” said IDC in its new 2024 “Worldwide Software and Public Cloud Servies Spending Guide” report.

“This reflects the crucial role software plays in digital transformation initiatives across various industries,” IDC said. “Businesses are investing heavily in cloud-based software, data analytics tools and AI platforms to optimise operations, enhance customer experiences and gain valuable insights.”

Top 10 industries for public cloud and software spending

There are 10 industries witnessing huge increases in their public cloud services and software spending on a global basis, according to IDC data. These 10 industries were responsible for approximately 60 percent of the total global IT spending market.

The top five industries are software and infrastructure services; telecommunications; retail; education; and government and the banking industry, which tied for fifth place.

From 2022 to 2023, the software and infrastructure services industry increased global spending by 19.4 percent.

IDC said there’s a growing demand for data analytics, cloud computing, government support and innovation, which makes the software and infrastructure services industry the fastest-growing market.

The telecommunications industry increased its spending on public cloud services and software by 16.6 percent from 2022 to 2023. IDC said expanding mobile data usage, 5G network deployments and more demand for cloud-based communication solutions were the key market drivers in the telecom industry.

Growth drivers for retail, education, banking and government spending

At No. 3, the retail industry increased spending by just over 16 percent annually from 2022 to 2023. The rise of e-commerce, omnichannel retailing and mobile shopping are the key spending growth drivers in the retail industry for public cloud services and software.

The education sector ranked No. 4, increasing public cloud services and software spending by 15.6 percent annually on a global basis. Spending growth was related to the growing demand for online education, EdTech adoption and government initiatives to promote digital learning.

There was a tie for fifth place, with the banking industry and federal/central government both increasing spending by 14.6 percent year over year.

Key growth drivers for the banking industry include the rise in digital banking adoption, while federal governments are investing in e-government services and cybersecurity.

Automotive, high-tech and industrial manufacturing

Rounding out the final four industries increasing their spending on public cloud services and software are state and local governments; automotive; high-tech and electronics; and industrial and other types of manufacturing.

State and local government spending increased 14.5 percent year over year globally, followed by automotive at 14.3 percent, high-tech and electronics at 14 percent, then industrial and other types of manufacturing at 13.4 percent.

Key growth drivers for state and local government spending were investments in e-government services and digital infrastructure.

The increase in electric vehicle adoption along with government incentives for EVs were the main growth drivers for the automotive industry.

Spending increased in the high-tech and electronics industry by 14 percent thanks to the growing demand for consumer electronics and smartphones, as well as investments in semiconductor manufacturing.

Finally, the industrial and other manufacturing industries boosted their spending annually due to the increasing automation and adoption of Industry 4.0 technologies, as well as government initiatives promoting manufacturing.

IDC’s “Worldwide Software and Public Cloud Services Spending Guide” quantifies public cloud computing purchases by cloud type for 28 industries and five company sizes across eight regions and 47 countries.