India’s IT spending is set to breach the $100-billion mark for the first time in at least three years, signalling a post-pandemic revival on the back of digital transformation deals.

According to report, India’s IT spending will grow 7% year-on-year to $101.8 billion in 2022. That compares with its forecasts of $81.89 billion expenditure in 2021, $79.26 billion in 2020 and $92.01 billion in 2019. The growth next year will be driven by investments in software solutions that's likely to grow 14.4% over the year-ago period to $10 billion.

“The digital transformation trajectory that began as a pandemic response is here to stay for the next few years,” said Arup Roy, vice president of research at Gartner. “India experienced one of the fastest recoveries despite being one of the worst-hit regions in the second wave of the pandemic… In 2022, CIOs in India will build on renewed interest in technology from the business to gain funding for new IT projects.”

Devices

Spending on devices, which accounts for 43% of India’s total technology expenditure, will grow at 7.5% in 2022 after 14% growth in 2021. Hybrid work adoption and pent-up device upgradation cycle will drive this segment. Demand will continue to increase despite the global chip shortage weighing on availability in the first two quarters of 2022.

IT Services

Spending in this segment is likely to increase by 9% year-on-year to $19 billion in 2022.

The Indian corporate sector is still emerging with respect to consumption of technology except BFSI and telecom sectors. But as other sectors catch up, the services bucket will increase. The spend on IT services has steadily grown in the past 10 years and it will likely continue in the next five years with very strong growth.”

Software spending will also increase thanks to collaboration solutions, digital enablement apps, security and hyper-automations solutions.

Communication

This industry has witnessed the maximum fluctuation in growth rate during 2020-21 as companies increased their spending in the sector during the pandemic to enable remote work and online education.

That will stabilise going forward. Spending on communication is expected to grow 2.3% in 2022 to $24 billion compared to the 11% growth in 2020 (second highest globally) and 4.4% growth in 2021. “Fixed enterprise voice market is in a constant decline and mobile data usage is also stabilising,” said Roy.

Data Centres

This segment is expected to grow 3.4% over the year-ago period to $2.8 billion in 2022 due to pent-up demand from 2020 that businesses are still addressing. “Enterprises shifting to cloud is a significant trend, which is causing the market to bifurcate between data centre ecosystems and hyperscalers. Consumption of solutions from hyperscalers is increasing rapidly,” Roy said.

Indian chief information officers 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. For 2022, CIOs are prioritising a move away from rigid and monolithic ways of doing business to respond better to disruptions.