Indian IT spending will grow by 13.8 per cent in 2022, down from 25.3 per cent in 2021, according to the latest data released by IDC’s Worldwide Black Book: Live Edition.

IT spending includes expenditure on hardware software and IT services, excluding telecom spending, business services and some emerging technologies, which are included in the ICT spending taxonomy. The overall drop in IT spending growth considers the recovery sentiment pervasive in Q1 2022, and the drag due to the weakening economic scenario in Q2 2022 onwards.

“The contraction in IT spending is due to reduced consumer technology spending. Enterprise technology spending remains stable as enterprises continue to protect their budgets and are managing by reallocating resources to needed items,” IDC said.

Resilience in short term

“Based on the current forecast of a mild global recession, we expect IT spending of Indian enterprises to demonstrate resilience in the short term,” says Vinay Gupta, Research Director, IT Spending Guides, IDC Asia/Pacific. “Indian enterprises continue to focus on their digital innovation initiatives, business operations resiliency and customer experience programmes. However, enterprises are keeping a sharp eye on global events,” he added.

Under pressure

Consumer IT spending, which recorded strong growth in 2021, is under pressure. Sales of PC, notebooks, hardcopy peripherals and tablets are expected to grow, albeit at a subdued pace this year, due to less pent-up demand and the tail end of buying cycle, which started in 2021 due to the pandemic.

Cellphone buying

Cellphone shipments declined for the third consecutive quarter in Q2 2022. Cellphones constitute almost 60-65% of consumer technology spending in India. “High prices due to rising inflation and unfavorable exchange rates will negatively impact the spending on mobile phones and, thus, the overall consumer technology spending growth. Even after considering the festive period of heavy promotional discounts in Q3 and Q4 of FY22, overall market growth by shipment and value for mobile phones, PC, and notebooks will be lower than that of 2021, and reach pre-pandemic levels. Expectations are that introduction of 5G services in urban areas will induce mobile device refresh, albeit at a higher price point,” IDC said.