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India’s IT spending to cross $100bn mark in 2022

Led by software investments, the growth in IT spending comes as organisations in the subcontinent look to modernise their IT infrastructure and support a hybrid workforce

IT spending in India set to grow by 7% next year to reach $101.8bn as organisations in the subcontinent look to modernise their IT infrastructure and support a hybrid workforce, according to the latest industry forecast by Gartner.

Led by software spending, which is tipped to hit $10.5bn in 2022, up 14.4% from 2021, all segments of IT spending in India are expected to grow. In fact, spending on software in 2022 would be nearly double of what it was pre-pandemic.

The next biggest growth area is IT services, where spending will grow by 9.1% in 2022. The growth rate is a slight decline from 2021, but is still higher than in 2020 when IT services spending grew by just 3% at the peak of the global pandemic.

As hybrid work adoption increases in the country, Gartner also forecast an uptick in spending on devices in 2022, reaching $44bn – an increase of 7.5% from 2021.

“The growth in devices is a combination of two components – hybrid work and pent-up demand from 2020 for device upgrades,” said Arup Roy, research vice-president at Gartner. “Spending on devices will make up 43% of total IT spending next year.”

A separate study by the National Association of Software and Service Companies (Nasscom) found that India’s technology workers and their employers are expected to return the workplace for up to three days a week next year as the hybrid work model catches on.

About 60% of organisations are ready to re-open their office spaces by January 2022, with IT and physical infrastructure in place to support entry scanning and digital asset security, among other operational requirements.

Roy noted that India’s digital transformation trajectory that began as a pandemic response is here to stay for the next few years.

“India has experienced one of the fastest recoveries despite being one of the worst hit regions in the second wave of the pandemic in early 2021. In 2022, CIOs in India will build on renewed interest in technology from the business to gain funding for new IT projects.”

On a broad level, Indian CIOs are likely to increase their spending towards projects that drive innovation and modernising legacy systems. Hiring a workforce that can deliver on these needs will also be a key priority, Gartner noted.

The research firm added that Indian CIOs will also be prioritising a move away from rigid and monolithic ways of doing business to a more composable business and IT architecture where they will be able to better respond to disruptions.

In India’s public sector, IT spending is projected to reach $8.3bn in 2022 – an increase of 8.6% from 2021 – as governments accelerate their digitalisation efforts. The software segment will also see the highest growth of 24.7% in 2022, fuelled by the use of artificial intelligence and machine learning in citizen service applications.

“Digitalisation initiatives of Indian government organisations took a giant leap in 2020 because of the global pandemic. The pandemic forced the government to shift priorities as supply chains and revenue streams dwindled,” said Apeksha Kaushik, principal research analyst at Gartner.

“As vaccination rates increase throughout the country and public health improves, governments will focus on furthering the digitalisation efforts on concerns such as ‘citizen experience’ and digital inclusion,” she added.

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