Analysts are expecting that spending by the Indian IT sector will increase by 11.9 per cent to $145.9 billion in 2024. According to industry experts, cloud, data centres, and generative AI, though currently small, are likely to be the fastest-growing segments over the next few years.
According to data from Gartner, Indian IT spending is forecast to grow from $130.4 billion in 2023. Segments like data centre systems at 16.5 per cent, devices at 14.5 per cent, software at 17.2 per cent, IT services at 11.1 per cent, and communication services at 6 per cent are poised to witness significant growth.
“2023 was a slow year worldwide for IT spending, including India. However, now the overall economic sentiment in India is significantly optimistic. Further, the expectations of a Fed and RBI rate cut are likely to boost economic sentiment in the corporate world,” said Dr Vikas V Gupta, Smallcase Manager, CEO, and Chief Investment Strategist at OmniScience Capital.
He added that Indian corporates are expecting strong economic growth over the next few years since they are investing heavily to capitalise on the expected demand over the next economic cycle. “Given this background, spending on IT and intangible assets is a must to have the systems in place to capitalise on the growth in fixed tangible assets,” he said.
Gupta also noted that the primary segment will remain devices followed by IT services and communication services. Growth in spending will be a boost for domestically oriented companies, giving them a good fillip to revenues. Consistent spending on IT is likely to make Indian corporations and governments more efficient and competitive.
On the other hand, Gartner forecasts that worldwide IT spending is expected to total $5.26 trillion in 2024, an increase of 7.5 per cent from 2023’s $4.89 trillion.
“Spending on data centre systems is expected to increase 24 per cent in 2024, up from the previous quarter’s forecast of 10 per cent growth. This is due to increased planning for GenAI,” the report said.
On a global level, IT firms are likely to invest the most in data centres, which are expected to grow by 24.1 per cent, followed by software at 12.6 per cent. However, this is the opposite in India’s case.
“If the global demand picks up, it will trickle down further to India. For companies in India, if their global business picks up, they will spend more in India also because that will have a second-order impact,” said Pareekh Jain, CEO at Pareekh Consulting and EIIRTrend.
Speaking about GenAI, he said, “If companies are doing proofs of concept (POC), they might need capacity and AI investments, so AI is one of the drivers. However, in terms of value, AI might not be very significant because globally it accounts for hardly 1-2 per cent of the revenue. Nevertheless, the interest is there. Some Indian companies might also be interested in doing AI projects, and that will push them to approach the bigger vendors.”