Photo: Mint
Photo: Mint

IT spending in India seen rising 6.6% to touch $94 billion next year

  • Software and IT services is expected to lead the IT spend growing at 15.2% and 13.4% respectively in 2020
  • The uptick in IT spending is expected to aid large IT companies like Accenture, IBM, and HPE

BENGALURU : IT spending in India is pegged to grow 6.6% to reach $94 billion in 2020 from $88.5 billion in 2019, primarily led by growth in consumer devices, according to the latest forecast by research firm Gartner.

Software and IT services is expected to lead the IT spend growing at 15.2% and 13.4% respectively in 2020, followed by devices (6.3%), data centre systems (2.5%), and communications services (2%).

The uptick in IT spending is expected to aid large IT companies like Accenture, IBM, and HPE. Even Indian IT services companies like Tata Consultancy Services (TCS) Ltd, Wipro Ltd, and Tech Mahindra Ltd which have a relatively strong domestic focus, are expected to benefit.

Graphic by Paras Jain/Mint
Graphic by Paras Jain/Mint

For TCS, India accounted for 5.7% of its overall revenue for the second quarter ended September. While Wipro and Tech Mahindra doesn’t share revenue specifically from India, the rest of the world (excluding North America and Europe) contributed 16.9% and 24.9% to their topline in the September quarter.

“2020 will be a rebound year for India’s IT spending as consumers return to purchasing mobile phones after sitting on the sidelines in 2019," said John-David Lovelock, research vice president at Gartner. “Additionally, business spending on IT grew 6% in 2019 and is expected to increase 9% in 2020, helping to drive growth across all segments."

Strong growth in total software spending will be driven by enterprise application software which is forecast to grow 17% in 2020. The expected increase in overall business spending will help drive 16% growth in enterprise mobile phone spending in 2020, pushing growth in the devices segment to 6.3%.

Arup Roy, research vice president at Gartner said that corporate spending in software and services saw an uptick as the Indian government introduced corporate tax cuts, along with policies that were aimed at reviving the economy and bolstering consumer spending in mid-2019.

“In the next two to three years, IT spending will increase as the economy benefits from the goods and service tax (GST) implemented by the Indian government in 2018, and as policies supporting consumer spending come into practice," said Roy.

Among technologies, automation-enabled areas such as robotic process automation, artificial intelligence, machine learning, and chatbots are seeing huge uptick, Roy said. “Cloud still remains quite strong, along with data and analytics."

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