Endava: AI set to drive 44% growth in digital services revenue by 2029

Digital services revenue is estimated to rise by 44%, expanding from 34% to nearly half (49%) of companies revenue by 2029, according to a report compiled from IDC surveys across Europe, Asia-Pacific region (APAC), and the Middle East demanded by Endava (NYSE ‘DAVA’), a leading technology services company combining world-class engineering, industry expertise, and a people-centric mindset.

This shift is driving businesses worldwide to prioritize operational efficiency, with a growing recognition of the need to modernize digital infrastructure to achieve scalability and cost-effectiveness.

The report highlights that globally, 48% of organisations already consider themselves digital businesses, but the report emphasizes that the future belongs to those willing to integrate AI into their operations fully. As businesses shift from merely building digital infrastructure to scaling it, AI and machine learning (ML) technologies will be key drivers of innovation.

According to the study, 49% of companies attribute overspending on digital infrastructure to the costs of maintaining legacy systems, underscoring the need for organizations to reevaluate and streamline their IT operations. In the next phase of digital transformation, AI is predicted to become a critical enabler, allowing businesses to innovate at scale while reducing the time and costs associated with automation and intelligence use cases.

The report points out that digital transformation must be seen as an ongoing journey without a definitive endpoint. AI is set to dominate the next chapter of this journey, and businesses that fail to embrace this technology risk being left behind.

Companies failing to adapt to the AI-driven market may face competitive disadvantages such as delayed time-to-market, less advanced product portfolios, and a weaker position in their respective sectors, according to the report.

IDC research shows that 60% of CEOs have made AI deployment their top priority, underscoring the growing importance of artificial intelligence in business strategy.

Another pressing issue highlighted in the report is the growing reliance on external IT services to fill skill gaps within organizations. Globally, a shortage of talent is identified as a major risk factor for the next 12 months, with 44% of businesses citing limited internal capacity for large-scale digital projects. External IT services providers are increasingly seen as vital partners in addressing these challenges and enabling future growth.

In the post-pandemic era of digital acceleration, organizations are now moving towards a phase of digital scale. This involves scaling technology, business operations, and data management to meet the demands of a rapidly evolving digital economy. A key focus is on leveraging data more effectively, as the value of data diminishes quickly, often within days. Companies are shifting to data-driven business models to deliver personalized customer experiences and drive continuous innovation.