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Covid-19 Impact: IT spending in India to fall 8% in 2020, says Gartner report

  • To adhere to the government's guidelines on social distancing, firms will have to spend more on business continuity, remote working and workforce collaboration

BENGALURU: IT spending in India will total $83.5 billion in 2020, a decline of 8.1%, showed latest forecast by research firm, Gartner. Though companies globally have often witnessed a fall, this is the first time in the past five years that the country's IT spending will drop.

“The fear of a global economic recession due to the covid-19 pandemic is forcing chief information officers (CIOs) in India to be very cautious on their IT spending this year," said Naveen Mishra, senior research director at Gartner.

“In partnership with their CIOs in India are reprioritising their IT budgets on mission critical initiatives," Mishra said.

To adhere to the government's guidelines on social distancing, firms will have to spend more on business continuity, remote working and workforce collaboration. This is shifting spending toward technologies such as desktop-as-a-service (DaaS), infrastructure-as-a-service (IaaS), virtual private network (VPN) and security. The overall cloud adoption in India has increased as a result of this increase in spending.

Spending on devices and data centre systems in India is expected to record the steepest declines in 2020, at -15.1% and -13.2%, respectively. CIOs will consider extending life cycles of their existing device assets, which may delay new purchases.

While spending will dip across all segments this year, technologies such as tele-health, smart chatbots, mobile applications enabling deliveries and distance-learning education softwares will experience a rise in spending. With this, spending on enterprise software will record a moderate fall of -2.6%.

“The lockdown measures forced sectors such as education, healthcare and public utilities to accelerate their digital transformation," said Mishra. “However, sectors such as retail, insurance, and banking that were already advanced in their digital transformation have to reduce their IT spending in 2020."

These sectors with high digital penetration will continue to spend on targeted initiatives such as artificial intelligence (AI), machine learning and virtual sales assistants. However, they will have to reduce or stop spending on business transformation, process re-engineering and modernisation of existing systems, Mishra added.

A recent Deloitte report also said CIOs must change their IT strategies for the long-term as many old business models will no longer be relevant in the post covid-19 scenario. The report also said IT budget will be significantly cut given the emerging cash crunch in organisations after the crisis.

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