Home / Industry / Infotech /  India IT spending to reach $110.3 bn in 2023 amid global slowdown: Gartner
Back

NEW DELHI: Spending on information technology (IT) by Indian businesses is estimated to grow 0.5% year-on-year to total $110.3 billion in 2023, according to a report published Wednesday by IT analyst firm Gartner.

The report said that software and IT services will drive worldwide IT spending to $4.5 trillion in 2023, an increase of 2.4% on year. This is, however, down from last quarter’s projection of 5.1% growth, primarily due to a slower-than-expected rebound in hardware sales.

Gartner had in November forecast Indian IT spending at $112 billion in 2023. The downward revision is the result of the impact of inflation on consumer spending power as well as the ongoing layoffs that tech companies have been undertaking.

“Consumers and enterprises are facing very different economic realities," said John-David Lovelock, distinguished VP Analyst at Gartner. “While inflation is devastating consumer markets, contributing to layoffs at B2C companies, enterprises continue to increase spending on digital business initiatives despite the world economic slowdown...A turbulent economy has changed the context of business decisions and can cause CIOs to become more hesitant, delay decisions or reorder priorities. We’ve seen this in action with the reshuffling taking place among some B2B companies, especially those that overinvested in growth. However, IT budgets are not driving these shifts, and IT spending remains recession-proof."

The software and IT services segments are projected to grow 9.3% and 5.5% in 2023, respectively. The devices segment is forecast to decline 5.1% this year as both consumers and enterprises lengthen device refresh cycles. In India too, only software shows a positive growth of 12.8% in 2023, up from 11.9% in 2022. IT services spending will largely remain flat at 6.7%, a moderate decline from 6.1% last year, said Gartner.

“During the height of the pandemic, employees and consumers had technology refreshes of tablets, laptops and mobile phones due to remote work and education," said Lovelock. “Without a compelling reason for an upgrade, device assets are being used longer and the market is suffering."

The Gartner report also noted that job vacancy rates have been increasing every quarter and open jobs per unemployed rate is at record lows in many countries. High competition for talent is challenging chief information officers (CIOs) to hire skilled IT staff, limiting growth for companies who struggle to scale without the requisite talent.

Simultaneously, as software spend continues to rise, the IT services market is growing as companies look to bring in outside staff for implementation and support. For example, spending on consulting is expected to reach $264.9 billion in 2023, a 6.7% increase from 2022.

“CIOs are losing the competition for talent," said Lovelock. “IT services spending is growing more quickly than internal services in every industry. Skilled IT workers are migrating away from the enterprise CIO towards technology and service providers (TSPs) who can keep up with increased wage requirements, development opportunities and career prospects."

Gartner said that while inflation continues to erode consumer purchasing power and drive device spending down, overall enterprise IT spending is expected to remain strong, backed by digital spending by businesses.

Another report by research firm IDC published in December 2022 also said that more than 95% of Indian organisations plan to increase spending on digital transformation (DX) or keep at the same level in 2023. The DX spending in India is likely to reach $85 billion by 2026 as firms aim to reduce the costs by increasing efficiency, improve security and risk capabilities, as well as customer experience via tech-enabled digital transformation in the long term, it said,

ABOUT THE AUTHOR

Sohini Bagchi

"Sohini Bagchi is a senior assistant editor with TechCircle with over 15 years of experience in technology journalism. She has previously worked with IDG Media and Trivone Digital Services. Sohini is also a published author of fiction and non-fiction books. Her debut novel 'Road to Cherry Hills' enjoyed critical acclaim worldwide. Her second book 'Techtonic Shift' traces the history and evolution of computers and the Internet. Sohini has a masters degree in communications from Manipal Institute of Communication, Karnataka. She is trained in Karate and enjoys blogging and stargazing when she is not working. "
Catch all the Industry News, Banking News and Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
More Less

Recommended For You

Trending Stocks

×
Get alerts on WhatsApp
Set Preferences My ReadsWatchlistFeedbackRedeem a Gift CardLogout