India IT spending shows resilience despite global headwinds: Report

Despite strong global headwinds, Indian IT spending is expected to grow by 13.8 percent this year, down from 25.3 percent in 2021, an IDC report said on Thursday.

The overall drop in IT spending growth considers the recovery sentiment pervasive in Q1 2022 and the drag due to the weakening economic scenario in Q2 onwards.

According to the report, the contraction in IT spending is due to reduced consumer technology spending. Enterprise technology spending is stable as enterprises continue to protect their budgets and are managing by reallocating resources to needed items.

“Based on the current forecast of a mild global recession, we expect IT spending of Indian enterprises to demonstrate resilience in the short term,” said Vinay Gupta, Research Director, IT Spending Guides, IDC Asia/Pacific.

“Indian enterprises continue to focus on their digital innovation initiatives, business operations resiliency, and customer experience programs. However, enterprises are keeping a sharp eye on global events,” he added.

The post-pandemic recovery of the Indian economy in late 2021 and early 2022 faced multiple headwinds. Inflation, global geopolitical tensions, devaluation of the rupee against the US dollar, a slowdown in global growth, and increasing interest rates are risks to economic growth.

“The risk of recession worldwide has continued to rise amid increasing inflation and the expectation of a tightening monetary policy. The Indian economy faces similar challenges and enterprises are turning cautious during these uncertain times,” said the IDC.

Expectations are that India’s GDP growth will be at risk in 2023 given the global headwinds, slowing down IT spending growth.

A lot will depend on RBI’s monetary policy going forward and the government’s public CAPEX push, industrial capacity utilization, and improvement in the infrastructure sector said the report.