Gartner lowers IT spending growth to 7.5% on demonetisation impact

After a 2 per cent reduction, growth to stand at Rs 51, 892 cr in 2017

Technology researcher Gartner has revised downwards the growth of India's information technology (IT) spending to 7.5 per cent to $7.8 billion (Rs 51,892 crore) in 2017, due to the impact of demonetisation.

“This is down from Gartner's previous projection for 9.5 per cent growth this year,” said the firm in a note on Thursday. 

India’s gross domestic product fell to 6.1 per cent in the fourth quarter of 2016-17, primarily due to the impact of demonetisation. This growth rate was the lowest in four quarters. Construction and financial services were the most impacted. 

“The two per cent (downward) revision in our outlook is primarily due to the effects of demonetisation and a drop in industrial production,” said Moutusi Sau, principal research analyst at Gartner, adding, "However, spending plans like affordable housing scheme, and increased loans to small and medium enterprises by the government are likely to have a positive effect on IT spending in the next few quarters."

Meanwhile, Gartner said, the IT services sector, which includes areas such as consulting, software support, business process outsourcing, IT outsourcing, implementation, and hardware support, is expected to grow 10.8 per cent in 2017 to $2 billion. With this, IT services should be the largest IT spending category.

The software segment alone is expected to grow 10.8 per cent in 2017 to $1.1 billion. This includes enterprise-resource planning, supply-chain management, customer-relationship management, desktop, infrastructure, vertical-specific software, and other application tools.