India Inc to spend over $100 bn on IT projects in 2022, report

India Inc to spend over $100 bn on IT projects in 2022, report
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1 Dec, 2021

India Inc is expected to spend a total of $101.8 billion on Information technology (IT) in 2022 to support new IT projects, forecasts market research firm Gartner. This marks a 7% increase in IT spending as compared to 2021, which saw India spend $95.1 billion on IT services, the report released on Wednesday said.

According to Gartner, spending decisions in 2022 will be driven by new projects that drive innovation, modernizing legacy systems, hiring the talent to support the projects and building an IT architecture that can withstand future disruptions.

“In 2022, CIOs in India will build on renewed interest in technology from the business to gain funding for new IT projects,” said Arup Roy, research vice president at Gartner. Roy believes the digital transformation trajectory that started in response to the pandemic is here to stay for the next few years. However, he cautioned that the highly fluid kind of business environment seen in the last 20 months will continue even in 2022.

Though spending is expected to grow across all major IT segments, devices will account for 43% of the total IT spending as more organizations are expected to shift from remote to hybrid work next year. The spending on devices will be around $44 billion, an increase of 7.5% from 2021.

Roy said growth in devices is a combination of two components – hybrid work and pent-up demand from 2020 for device upgrades.

After devices, Indian organizations are expected to spend most on communication services ($24.5 billion) and IT services (19.7 billion), growing at 2.3% and 9.1%, respectively, as compared to 2021. Spending on communication services saw a major jump of 11% in 2020 after the pandemic to support remote work. However, with more organizations expected to return to work in 2022, the growth rate in spending in this segment was expected to fall.

In terms of the highest growing segment, spending on software services is expected to grow at 14.4% from 2021 to reach a total of $10.5 billion.

Though data centre systems are no longer a top priority, many organizations are still not giving up on them completely. Many organizations still trust them more for storing critical data and applications. Spending on data centre systems is only expected to be $2.8 billion, but the growth rate would be 3.4%.