IT spending by Indian enterprises and service providers is projected to grow 7.8 per cent in 2023, albeit slower than in 2022, according to the latest data released by IDC’s ‘Worldwide Black Book: Live Edition’. 

Consumer IT spending (dominated by consumer purchases of devices such as mobiles, tablets, PCs, wearables, and peripherals) saw a drastic decline in Q4 2022 and turned cautious due to rising prices, pulling the growth to 2.1 per cent in 2023. 

Overall, Indian IT spending (which includes spending by enterprises, service providers, and consumers) is projected to grow by 4.7 per cent in 2023 to $86.7 billion in constant currency, lower than the 5.8 per cent growth IDC reported for 2023 in its October press release. 

Immediate concerns

Enterprises’ immediate concerns impacting IT budgets are inflation-driven price increases, staffing shortages, IT supply chain constraints — especially on the networking side, and the impact of the weakening global economy on expected business revenues, said the report. 

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“Rising inflation and currency devaluations made technology investments costlier. Enterprises focused on immediate needs by either stretching or prioritising budgets. But with worries around weakening global macroeconomic situation, spending growth has moderated,” says Vinay Gupta, Research Director, IT Spending Guides, IDC Asia/Pacific.

Enterprises still face challenges impacting their business and will look at consumption-based models to drive their focus on transformation, he added.

Infrastructure spending

With investments by enterprises and service providers, infrastructure spending (dominated by server, storage, and networking equipment) had a banner year in 2022.

However, with a moderating economic outlook, spending growth will slow in 2023. Enterprises aim to drive efficiencies, optimise cost using automation tools and prioritise an as-a-service consumption model for infrastructure purchases avoiding significant Capex investments, said the report. 

Domestic IT services spending is projected to grow 8.7 per cent in 2023, driven by enterprises’ need to increase customer engagement and satisfaction, launch new products, services, and improve operational efficiency to drive revenue growth and profitability. 

Software spending is projected to grow 15 per cent in 2023, driven by higher adoption of cloud-based solutions.

Automation-related platforms and tools, security, workplace solutions (collaboration, content management, virtual meeting, unified communications), data and analytics initiatives and projects, infrastructure, and IT operation optimisation initiatives are still focused areas for enterprises despite the moderating economic growth.

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