Enterprise-wide application modernisation, the accelerating adoption of AI-enabled platforms, and the rising demand for a more secure and scalable digital infrastructure across industries are pivotal trends that will see global spending on public cloud services jump another 21 percent year on-year and surpass US$1 trillion (S$1.28trillion) in 2026, according to the latest update in International Data Corporation’s (IDC) Worldwide Software and Public Cloud Services Spending report.
The report cites that Asia Pacific and China will account for the third largest spend globally at US$84 billion, behind the United States at US$ 647billion and Europe at US$ 255billion.
Spending on the public cloud will further double by 2029, predicted IDC, explaining that the growth of public cloud services is now being led by the continued expansion of Software-as-a-Service (SaaS) and a sharp acceleration in Platform-as-a-Service (PaaS) adoption as organisations scale AI development, data platforms, and cloud-native application environments.
IDC said SaaS remains the largest public cloud deployment category this year, accounting for more than half of global spending. Looking at the largest secondary markets, IDC added that investments are now being concentrated in IaaS, Enterprise Resource Management (ERM), and security software, reflecting enterprise priorities around cloud migration and cybersecurity, as well as core modernisation.
The public cloud outlook till 2029
Public cloud services spending will maintain strong double-digit growth through 2029, said IDC in the report, as AI-enabled platforms, cloud-native application development, and industry-specific cloud solutions become embedded in enterprise digital strategies.
The report predicts that growth could accelerate with broader AI monetisation, while risks include regulatory fragmentation, skills shortages, and cloud cost optimisation pressures.
The three fastest-growing Industries for PaaS
IDC sees three sectors as the fastest-growing PaaS sectors:
Banking: Institutions are modernising core systems and deploying AI-driven risk, fraud, and real-time banking services.
Retail: PaaS supports rapid development of applications for dynamic pricing, inventory optimisation, and digital commerce.
Aerospace and Defense: Increased defense budgets and geopolitical tensions are driving investment in secure cloud platforms supporting analytics, AI-enabled intelligence, and mission-critical systems.
“Public cloud spending will continue to grow as cloud migration remains central for agility, resilience, and efficiency,” said Andrea Minonne, research manager at IDC. “In aerospace and defense, higher budgets and rising geopolitical tensions are driving demand for secure, cloud-based platforms supporting advanced analytics and mission-critical systems, with increased defense spending and escalating tensions in the Middle East accelerating investment in AI-enabled and security-focused cloud environments.”
IDC adds that three sectors - banking, software and information services, and retail - are leading cloud adoption and spending while capital markets, banking, and software and information services, insurance, and aerospace and defence are markets growing the fastest.
The IDC Worldwide Software and Public Cloud Services Spending Guide quantifies public cloud computing purchases by cloud type for 28 industries and 8 company sizes across 53 countries. This spending guide is aimed at helping IT decision makers understand the industry-specific scope and direction of public cloud services spending today and over the next five years.
