India IT Spending forecast 2016- Strong despite Inflation & Currency pressures

According to Gartner Inc., IT spending in India is expected to total USD 71.5 billion in 2013, a 7.7 per cent increase from the USD 66.4 billion forecasted for 2012 and expected to touch USD 95.9 billion in 2016.  Gartner forecasts the telecommunications market is the largest IT segment in India with spending forecast to reach USD 47.8 billion in 2013 and USD 59.5 billion in 2016 from USD 44.7 billion in 2012, growing at a CAGR of 3.6 per cent. The IT services market is poised to grow from USD 9.2 billion in 2012 to USD 10.3 billion in 2013 and then touch USD 16.1 billion in 2016. The Software market is expected to grow at a CAGR of 11.4 per cent from USD 3.5 billion in 2012 to USD 6 billion in 2016. The hardware market in India, with CAGR of 7.5 per cent is estimated to grow from USD 9.1 billion in 2012 to USD 14.3 billion in 2016. “India like other emerging markets continues exercising strong momentum despite inflationary pressures and appreciation of local currencies, which are expected in rising economies,” Peter Sondergaard, senior vice-president and global head of research at Gartner said.

India IT spending is expected to grow as businesses are looking to IT to help support the challenges of improving customer support, supply chain management, provide their products and services online, optimize business processes and drive innovation in the business. Not only the businesses but government of India and state governments too are spending heavily on building and improving the IT infrastructure so that they can automate the various processes and provide services to citizens on line there by reducing waiting times, eliminating unnecessary paper works and making governance more transparent. Bids were called for some of the major projects by Governments at the center and state levels which were won by both Indian and Multi National players and work is going on a frantic pace. Indian IT industry is also expected to generate more than 4.5 million jobs and it is one of the critical parts of the Indian economy. There has been a major transformation where in IT is no longer a back office function but a front line function with significant business impact for both businesses and governments. 

India IT Spend Forecast – 2008 - 2014

According to Gartner, India information and communication technology (ICT) spend is forecasted to reach $71. 9 Billion. By 2011, a 10.3 percent increase from 2010 spending of $65.23 billion and expected to grow with CAGR of 10.9% and reach $95 billion by 2014. Hardware (CAGR 20.4%), Software (CAGR 13.4%), IT Services (CAGR 17.1%) and Telecom (CAGR 7.9%) will drive growth in spending. CAGR is for 2009-2014. Hardware growth is driven by rise in demand of computing needs of people both in rural and urban. IT services growth will be driven by Government and defense segments, large systems integration projects for application services and managed services around IT. Software segment is expected to grow with business intelligence, middleware, database management systems (DBMS) and application development (AD) tools. Verticals like manufacturing, retail, transport and hospitality, government, telecom, financial sectors and IT services will drive IT spend growth. Chart- 1 – Source - Gartner

IDC India IT Spend forecast 2008-2013

According to IDC, from the end of 2008 to the end of 2013, IT spending will grow 11.8% a year, compared to GDP growth of 7.1% a year. Overall IT spending is expected to reach Rupees 1643 billion by 2013 with a CAGR of 11.8%. IT Hardware (CAGR 9%), Software (CAGR 15.2%) and IT Services (CAGR 16.4%) is expected to drive growth. The growth in IT spending will be driven by demand for computing by citizens, businesses and government organizations. Demand across verticals like Banking, Government, manufacturing, retail, telecom etc will drive growth in IT Spending.  IDC is expecting growth in India IT spending despite the current economic crisis and emerging markets are expected to drive growth in Global IT spending. Chart -2 Sources: IDC