Tech spending of Indian banks to rise 2% amid global slowdown: Gartner

Spending on information technology (IT) by Indian banking and investment services is forecast to total $11.28 billion in 2023, a moderate increase of 2% from 2022, according to a report published on Wednesday by market research firm Gartner.

Spending on IT software will see the largest growth with an increase of 10.5% in 2023, followed by IT services, which shows a 5% growth this year. Despite the momentum, the numbers are slightly lesser than the previous year, according to Gartner. In 2022, IT software growth was pegged at 12.2% and IT services stood at 5.4%, the report said.

Meanwhile, worldwide banking and investment services IT spending is forecast to total $652.1 billion in 2023, an increase of 8.1% from 2022, according to Gartner. Globally, too, spending on software will see the largest growth with an increase of 13.5% in 2023. IT services are also forecast to an increase to 9.3% this year, it said.

“Current economic headwinds have changed the context for technology investments in banking and investment services this year,” said Debbie Buckland, Director Analyst at Gartner, speaking on the global IT spending trends.

“Rather than cutting IT budgets, organizations are spending more on the types of technologies that generate significantly higher business outcomes. Spending on software, for example, is shifting away from building it in-house, in favour of buying solutions that generate value from investments more rapidly,” said Buckland.

More than half plan to increase investments in cloud, while reducing IT spending in their own data centres. This is reflected by slower growth in data centre systems spending from 13.2% in 2022 to 5.7% in 2023. In India, the trend is even more pertinent. India’s data centre systems show a negative growth forecast and is slated to become -3.2% in 2023, from a high growth of 15.3% last year, showed Gartner.

More than half plan to increase investments in cloud globally, while reducing IT spending in their own data centers. This is reflected by slower growth in data center systems spending from 13.2% in 2022 to 5.7% in 2023, the Gartner report said.

In a report published in January, Gartner forecasted that spending on IT by Indian enterprises is estimated to grow a meagre 0.5% year-on-year to total $110.3 billion this year. The report also noted that turbulent economy has changed the context of business decisions and can cause Indian CIOs to become more hesitant thereby delaying decisions on their technology spends.