Australia IT spending set to hit AUD $192.2bn in 2027

IT spending in Australia is forecast to exceed AUD $192.2 billion in 2027, up 8.7% from 2026, according to Gartner.

Infrastructure as a service is set to record the fastest growth among the categories Gartner tracks, rising 22.1% to AUD $9.1 billion. Data centre systems are expected to increase 16.6% to AUD $14.6 billion, while software spending is forecast to grow 13.3% to AUD $68.3 billion.

The figures suggest Australian organisations will continue investing in technology even as growth slows from the 10.3% rise in overall IT spending recorded in 2026. Software will remain the country's largest IT spending category by value, ahead of services at AUD $53.2 billion, communications services at AUD $27.5 billion, devices at AUD $19.5 billion and data centre systems.

Neil Osmond, Distinguished VP Analyst at Gartner, said the spending mix is changing as companies look beyond limited AI projects.

"Technology investment in Australia is being reshaped by the growing recognition that AI will influence every aspect of how organisations operate and compete," Osmond said.

"Business leaders are moving beyond isolated use cases and investing in the infrastructure and software ecosystems required to embed AI across the enterprise. This is driving a long-term reallocation of technology spending toward capabilities that can deliver agility, productivity and innovation at scale."

Infrastructure shift

Infrastructure as a service stands out in the forecast because of AI-focused cloud demand. AI-optimised IaaS is projected to grow 58.5% in 2027, making it a major driver of the broader rise in the segment.

The same trend is evident in data centre spending, where server investment is expected to climb 19.7%. Gartner said this reflects spending by service providers and hyperscalers on AI-optimised servers to support generative AI use and the broader push to embed AI in enterprise cloud applications and workflows.

The analyst firm linked this to a much larger build-out of computing infrastructure, with Australian spending on servers and related systems forming part of a global push to expand capacity for AI workloads.

"The rapid growth in AI-optimised servers and data centre systems spending in Australia is part of the global AI infrastructure roll-out, which is the largest infrastructure project ever attempted," said John-David Lovelock, Distinguished VP Analyst at Gartner.

"This new capacity will support the AI model and agent workloads required by organisations as they scale AI capabilities across the enterprise."

Software remains largest

While infrastructure categories are growing quickly, software remains by far the largest area of IT spending in Australia. Gartner expects software spending to rise from AUD $60.3 billion in 2026 to AUD $68.3 billion in 2027.

Demand is being driven by additions to cloud software already used within organisations, particularly generative AI models and agentic AI embedded in established enterprise applications rather than replacing them outright.

Lovelock said some parts of the software market are already showing commercial traction.

"Continued strong growth in enterprise software within Australia is largely fuelled by the addition of GenAI models and agentic AI to the existing cloud software running within organisations," Lovelock said.

"Software featuring embedded agentic capabilities will see increasing demand by business leaders. Early value is already materialising across high-impact segments, specifically CRM and analytics."

Other categories in the forecast show steadier growth. Device spending is projected to rise 5.5% to AUD $19.5 billion, services spending is expected to increase 3.4% to AUD $53.2 billion, and communications services are forecast to grow 3.4% to AUD $27.5 billion.

The 2027 total of AUD $192.2 billion compares with AUD $176.9 billion in 2026. Data centre systems posted the sharpest growth rate in 2026 at 64.3%, but Gartner expects that pace to slow substantially even as investment remains elevated at AUD $14.6 billion.

Gartner said its forecast is based on analysis of sales by more than 1,000 vendors across IT products and services, using primary research supported by secondary sources to estimate market size.