A recent international survey reveals a sharp difference in the trends of IT investment between US and European companies, which may have ramifications for global competitiveness. The results show that, in comparison to their European counterparts, American businesses are investing a substantially larger percentage of their income in technology and IT infrastructure.

Big US companies—those with yearly sales above $1 billion—invest about 1.45% of their entire sales in IT, according to a Capgemini analysis that polled 2,500 business executives globally. On the other hand, big European companies only invest 1.29% of their revenue, which is 10% less than their American counterparts.

Jeremy Jurgens, Managing Director and Head of the Center for the Fourth Industrial Revolution at the World Economic Forum, said, “The US market’s sheer size gives us a unique advantage in driving IT investments at a much larger pace compared to Europe.”

When considering mid-sized enterprises, the investment difference gets even more pronounced. Medium-sized businesses in the US spend 3.04% of their revenue on technology, while comparable businesses in Europe only spend 2.07%. Despite new European legislative frameworks like the Network and Information Security Directive (NIS2) and the Digital Operational Resilience Act (DORA), which are both anticipated to encourage businesses to increase their investments in IT infrastructure and cybersecurity, this disparity still exists.

Businesses around the world understand the value of investing in IT, as seen by the 69% of executives polled who said they must raise their IT budgets in order to remain competitive. European businesses, however, are still more cautious in their strategy. Just 64% of executives in Europe said they are worried about their companies’ low IT spending, which is far less than the global average. On the other hand, a startling 84% of American corporate executives express concern that their organizations could not be making enough IT investments, highlighting a greater dedication to technology growth in the US.

Capgemini’s Nordic Head, Caroline Segerstéen Runervik, outlines the possible dangers of European businesses lagging behind in the global technology race. “These investment gaps could significantly hinder long-term competitiveness, as Europe already faces challenges in scaling digital transformation efforts and attracting top IT talent,” she says.

Closing the IT investment gap is essential for innovation-driven nations like Sweden to keep a firm presence in international markets. European companies run the risk of falling behind as the US continues to accelerate its technology-driven growth if they don’t make a strategic change in goals.