As per forecast released by IT analyst firm Gartner, Indian firms will spend $110.3 billion on IT in 2023, an increase of 0.5% over the previous year.
Based on the analysis, software and IT services would raise global IT spending by 2.4% annually to $4.5 trillion in 2023. However, this is lower than the anticipated 5.1% growth for the previous quarter, partly as a result of a slower-than-anticipated recovery in hardware sales.
In November, Gartner predicted that Indian IT spending would reach $112 billion by 2023. The impact of inflation on consumer purchasing power and the continual layoffs IT companies have been conducting are the causes of the downward revision.
“Consumers and enterprises are facing very different economic realities," said John-David Lovelock, distinguished VP Analyst at Gartner. “While inflation is devastating consumer markets, contributing to layoffs at B2C companies, enterprises continue to increase spending on digital business initiatives despite the world economic slowdown...A turbulent economy has changed the context of business decisions and can cause CIOs to become more hesitant, delay decisions or reorder priorities. We’ve seen this in action with the reshuffling taking place among some B2B companies, especially those that overinvested in growth. However, IT budgets are not driving these shifts, and IT spending remains recession-proof."
In 2023, it is anticipated that the software and IT services industries will expand by 9.3% and 5.5%, respectively. As device refresh cycles get longer for both consumers and businesses, the gadgets segment is expected to fall 5.1% this year. Only software exhibits a positive rise in India as well, rising from 11.9% in 2022 to 12.8% in 2023. According to Gartner, spending on IT services will largely remain steady at 6.7%, a slight decrease from 6.1% in 2017.
“During the height of the pandemic, employees and consumers had technology refreshes of tablets, laptops and mobile phones due to remote work and education," said Lovelock. “Without a compelling reason for an upgrade, device assets are being used longer and the market is suffering."
The Gartner survey also mentioned that open jobs per unemployed rate is at record lows in several nations, and job vacancy rates have been rising every quarter. High talent competition makes it difficult for chief information officers (CIOs) to find qualified IT workers, which restricts growth for businesses that find it difficult to scale without the necessary expertise.
The IT services market is expanding at the same time as software spending does so because more businesses are looking to hire outside help for deployment and support. For instance, spending on consultancy is predicted to climb by 6.7% from 2022 to $264.9 billion in 2023.
“CIOs are losing the competition for talent," said Lovelock. “IT services spending is growing more quickly than internal services in every industry. Skilled IT workers are migrating away from the enterprise CIO towards technology and service providers (TSPs) who can keep up with increased wage requirements, development opportunities and career prospects."
According to Gartner, despite inflation's ongoing effects on consumer purchasing power and device expenditure, overall enterprise IT investment is anticipated to remain healthy, supported by business digital spending.
More than 95% of Indian organisations want to either grow or maintain their level of expenditure on digital transformation (DX) in 2023, according to a different study by the research firm IDC that was released in December 2022. By 2026, it is predicted that India would spend $85 billion on digital transformation, as businesses look to cut costs by improving efficiency, enhance security and risk management, and enhance customer experience.
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