IT spending by Indian businesses to grow 2.6% in 2023: Gartner

Information technology (IT) spending by Indian businesses is projected to grow from $109 million in 2022 to $112 million in 2023, up by 2.6%, according to a recent forecast by analyst firm Gartner. While the growth is moderate, the analyst firm said, despite the looming tensions of global inflation and the weakening rupee, Indian businesses will continue to spend in some of the key segments in the next one year.   

“Inflation has not impacted enterprise spending on technology globally, and India is no exception to this trend,” said Arup Roy, vice president-analyst at Gartner. “The headwinds are in favour of technology as businesses realised 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.”   

Gartner forecasts weakening demand for devices in 2023 as device upgrades stabilize spending on data centre systems will also experience a decline as businesses opt for public cloud services. This segment will see over 35% decline in growth by next year. The data centre segment, which saw a decline in growth this year by 3% from 2021 may see a negative growth of -1.4%, said Gartner. Other sectors in IT including software, communications and services will see moderate growth of nearly 1% each in the next one year.   

On a separate report by Gartner released in October, it said, worldwide IT spending is projected to total $4.6 trillion in 2023, an increase of 5.1% from this year. Demand for IT in 2023 is expected to be strong as enterprises push forward with digital business initiatives in response to economic turmoil.  

“Enterprise IT spending is recession-proof as CEOs and CFOs, rather than cutting IT budgets, are increasing spending on digital business initiatives,” said John-David Lovelock, Distinguished VP Analyst at Gartner. “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. However, inflation has cut into consumer purchasing power in almost every country around the world,” he said.  

Lovelock believes the highest category of technology investment comes from cloud spending which will rise by about 20% for the next two to three years. India, according to the recent report will also see end-user spending on public cloud to grow 27% in 2023, said the analyst firm.   

“As Indian organisations advance in their digital initiatives and maturity, they will need to elevate their cybersecurity focus or face severe business risk. Also, paucity of good quality digital talent and technology or management skills will continue to be some of the top challenges that CIOs in India face in 2023,” said Roy.   

 "CIOs in India will need to be extremely creative about how they source talent, where they source from and how effectively they use those resources, putting further emphasis on upskilling and reskilling of the tech workforce," he said. 

In this context, a recent study by digital infrastructure firm, Equinix, said that eight out of 10 Indian businesses in India are reskilling IT workers in response to the growing tech skills gap. While 86% of Indian IT leaders said they reskill workers from similar industries, 50% are trying to bolster their workforce with recruits from unrelated sectors, it said.

A report by Monster.com released last week also showed that automation and telecom jobs will continue to rise with enterprise increasing IT spending in these areas. With companies expanding their digital footprints, skills such as DevOps, full stack, cloud, open stack, edge computing, robotic process automation (RPA), big data and Python, which account for 72% of the total jobs in the sector, will also be on the rise.