Indian companies, government bodies, and enterprises are likely to severely cut spending on information technology in 2020, as they try to absorb the blow to their revenues. Research and advisory firm, Gartner expects IT spending in India to decline by 8.1 percent in 2020 versus 2019. In absolute terms, that works out to around $7.3 billion. (see table below).

This is for the first time in five years that domestic IT spending has declined. Last month Gartner had forecast a $300 billion drip in global IT spending in 2020.

“The fear of a global economic recession due to the COVID-19 pandemic is forcing CIOs (Chief Information Officers) in India to be very cautious about their IT spending this year,” said Naveen Mishra, senior research director at Gartner. “In partnership with their CFOs (Chief Financial Officers), CIOs in India are reprioritizing their IT budgets on mission-critical initiatives.”

Spending on devices and data center systems in India is on pace to record the steepest declines in 2020. CIOs in India will consider extending life cycles of their existing device's hardware assets which will delay new purchases. In addition, the fall in consumer demand experienced in the first quarter of 2020 and the focus on nonessential product purchases will contribute to the decline in device spending.

“The lockdown measures forced sectors such as education, healthcare, and public utilities to accelerate their digital transformation,” said Mr. Mishra. “However, sectors such as retail, insurance, and banking that were already advanced in their digital transformation have to reduce their IT spending in 2020. These sectors will continue to spend on targeted digital initiatives such as artificial intelligence, machine learning, and virtual sales assistants. However, they will have to reduce or stop spending on business transformation, process re-engineering, and modernization of existing systems.”

While spending is on pace to dip across all segments in India this year, technologies such as telehealth, smart-chatbots, mobile applications enabling deliveries, and distance learning education software will experience an increase in spending in 2020. As a result, spending on enterprise software is set to record its biggest decline in 2020.

Gartner says its IT spending forecast methodology relies heavily on rigorous analysis of sales by thousands of vendors across the entire range of IT products and services. The firm uses primary research techniques, complemented by secondary research sources, to build a comprehensive database of market size data on which to base its forecast.

First Published:Jun 3, 2020 11:07 AM IST