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In 2020, India will have the slowest tech spending growth in at least a decade on account of sharp economic disruption due to Covid-19 pandemic, according to analysts tracking the sector.
“In the best case, tech market growth will slow to 1.2 per cent in 2020 and jump back to 8.4 per cent in 2021. This scenario becomes less likely if India’s major economic hubs remain under strict lockdown beyond June. The other scenario is worse: Tech spending might contract by up to 4.8 per cent in 2020 with only a mild recovery, to 1.4 per cent growth, in 2021,” said Ashutosh Sharma, V-P and Research Director at marketing research firm Forrester, in a new report.
Forrester’s 2019 prediction had pegged tech spending growth at 7 per cent in 2020. But the country-wide lockdown in March brought everything to a grinding halt, leading to unprecedented economic woes not seen even during the 2008 global financial crisis. Forrester has had to revise its tech spending forecasts across the globe.
According to International Data Corporation (IDC) forecast, India’s domestic IT spending is expected to drop to -4.5 per cent in 2020 as compared to 2019 growth rate of +9.1 per cent.
Shweta Baidya, Senior Research Manager, Enterprise Software and IT Services, IDC India, said, “IT vendors are gearing up to adapt and transform the way of doing business, in a bid to support their clients during these testing times. Enterprises are investing in solutions that enable their remote workforce to remain productive without service disruptions.”
Consulting services
The Forrester report suggested that the biggest impact would be on tech consulting services, hardware, and software. Tech outsourcing and hardware maintenance will also see a decline in growth but could be the least impacted.
“Most firms we speak with have come to terms with the unprecedented nature of the pandemic and expect to be dealing with a different world once it’s over. Some firms are beginning to reprioritise initiatives and conserve and reallocate their IT budgets,” the report said.
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