Enterprises to keep domestic IT spending resilient

NEW DELHI : Demand for digital transformation, data localization rules and related aspects are expected to keep information technology (IT) spending in India resilient in 2022, a new report said.

Overall IT spending among consumers and enterprises will increase 13% this year, compared to a 25% growth in 2021, said the report by market researcher International Data Corp. (IDC) India.

According to IDC India, the growth slowdown is expected due to reduced consumer IT expenditure— including mobile phone and laptop sales—which is tipped to decline sharply this year.

However, the growth pace in enterprise spending, as well as costs incurred by IT service providers such as Tata Consultancy Services, Infosys and Wipro, will remain resilient based on the demand for cloud migration among companies, and the overall digital transformation of domestic businesses.

As a result, India will continue to exceed the global growth pace of IT spending, which is tipped to be around 6% this year. According to industry analysts, market headwinds such as concerns around inflation, coupled with cautious approach from enterprises offering large deals (valued at above $100 million per year) to IT services firms, are impeding the growth pace of IT spending globally.

Kumar Rakesh, IT and automotive analyst at BNP Paribas India, said one of the key factors is the increasing importance among enterprises to make “targeted” IT spends.

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“This has increased the potential for IT services to attract more clients, as customers and supply chains increasingly come online. Companies are becoming tech-savvy across industries, leading to a structural change in the growth pace of the IT industry. This has made the IT majors resilient to various market factors,” said Rakesh. He further added that while the global IT sector saw quarterly sequential growth rate of around 6% in the first half of FY23, the same may reach “high-single digit growth” in the next two quarters.

This, however, may see emerging global markets such as India play an increasingly vital role as major global spenders hold back.

For instance, on 19 July, a Bloomberg report said Apple, the world’s most valuable company at $2.6 trillion as of May, will slow down hiring and cut expenses due to growing macroeconomic concerns.

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