Growth of India Inc's IT spending likely to remain modest in 2023

Indian businesses are likely to increase their spending on information technology slightly in 2023 amid the looming tensions on inflation and economic slowdown. India’s overall IT spending is projected to grow 2.6 per cent next year down from 22.1 per cent in 2021, according to Gartner, Inc.

However, the growth of IT spending has improved compared to 2022, when it had come down to 1.9 per cent. Indian businesses are expected to spend around $112.42 billion on their IT needs in the coming year.

The spending in segments like data center systems and IT devices is likely to take a hit from the slowdown. According to the forecast, spending on data center systems will decline by 1.4 per cent, as businesses opt for public cloud services. 

The device spending may shrink by 1.2 per cent, as device upgrades stabilize, weakening demand for devices in 2023. Still, the spending on devices will form around 42.56 per cent of total IT expenditure, as per the forecast.

On the other hand, end-user spending on public cloud in India is forecast to grow highest by 27 per cent. It is followed by spending on software projected to grow at 13.7 per cent. 

“The headwinds are in favor of technology as businesses realized how going digital can benefit them in the long run. Depending upon the maturity level of the digital enterprise, the spending context may be different for different businesses, but overall technology spending will continue to be on the rise in 2023,” said Arup Roy, VP Analyst at Gartner. 

The market research firm has previously projected worldwide IT spending to grow 5.1 per cent next year. Similar to India, the global forecast released in October expects spending on devices to shrink by 0.6 per cent. 

“Economic turbulence will change the context for technology investments, increasing spending in some areas and accelerating declines in others, but it is not projected to materially impact the overall level of enterprise technology spending,” John-David Lovelock, Distinguished VP Analyst at Gartner had said. 

He added that “inflation has cut into consumer purchasing power in almost every country around the world. Consumer purchasing power has been reduced to the point that many consumers are now deferring 2022 device purchases until 2023, driving spending on devices down 8.4% in 2022 and 0.6% in 2023.”

Gartner’s IT spending forecast methodology relies heavily on analysis of the sales by over a thousand vendors across the entire range of IT products and services. The market research firm uses primary research techniques, complemented by secondary research sources, to build a comprehensive database of market size data on which to base its forecast.