Indian IT spending is likely to grow 7.7 percent: Gartner

Indian IT spend is expected to grow 7.7 percent in 2022 to $114.9 billion, compared to a growth rate of 21.2 percent in the previous year, according to technology advisory Gartner.

The main drivers of growth are projected to be software (16.1 percent), followed by data centre systems (13.6 percent) – and IT services (10.3 percent) on a larger base of $21.2 billion, Gartner stated in its latest forecast.

“Ongoing investment on hyperscale data centres coupled with average selling price (ASP) increase is forecast to drive revenue growth for data centres in 2022," said Naveen Mishra, senior director analyst at Gartner. "Digitisation and application modernisation will trigger software refresh, including ongoing SaaS adoption,” he added. 

On the flip side, the devices segment is expected to grow at a modest 6.6 percent in 2022 to $51.2 billion. Gartner attributes it to tightening consumer spending because of high inflation, and supply constraints.

As CIOs embark on their multi-cloud strategy, cloud services is the underpinning driver for an impressive growth in IT services, Mishra added.

Gartner expects the critical IT skills shortage across the globe to abate by the end of 2023 for two reasons. One, the management push to complete digital transformations will slow down. Two, enterprises will use the interim period to up-skill and res-kill existing staff.

However, in the near term, CIOs will be forced to take action to balance increased IT demand and dwindling IT staffing levels. Technology service providers are currently increasing prices on IT to allow for competitive salaries, which is driving an increase in spending in software and services through 2022 and 2023.

Globally, software spending is expected to grow 9.6 percent to $806.8 billion in 2022, and IT services spending is forecast to reach $1.3 trillion.

“Additionally, CIOs are using more IT services to assist in the lack of skilled IT staff," said John-David Lovelock, distinguished research vice president at Gartner. "Tasks that require lower skill-sets tend to be outsourced to managed service firms to alleviate staff time, while critical strategy work, which requires high-end skills unobtainable by many enterprises, will increasingly be fulfilled by external consultants.”

“Inflation is top of mind for everyone," Lovelock said. "Central banks around the world are focusing on fighting inflation, with overall inflation rates expected to be reduced through the end of 2023. However, the current levels of volatility being seen in both inflation and currency exchange rates is not expected to deter CIOs’ investment plans for 2022.” he explained.

Worldwide IT spending is projected to total $4.5 trillion in 2022, an increase of 3 percent over the previous year, according to Gartner. The corresponding figure in 2021 was 10.2 percent.

"Organisations that do not invest in the short term will likely fall behind in the medium term and risk not being around in the long term," Lovelock said.