Gartner Forecasts 11.2% Growth in India's IT Spending for 2025, with GenAI Driving Software Sector

Gartner Forecasts India IT Spending to Reach $160 Billion in 2025

GenAI-Enabled Technologies Boost Software Spending in India in 2025 India IT spending is projected to total $160 billion in 2025, an increase of 11.2% from 2024, according to the latest forecast by Gartner, Inc. "In 2025, Indian chief information officers (CIOs) will start allocating budgets for generative AI (GenAI) beyond initial proof-of-concept projects," said Naveen Mishra, VP Analyst at Gartner. "While spending on GenAI will increase, CIOs' expectations for its capabilities will diminish. Additionally, Indian CIOs are expected to significantly boost spending on technologies such as cybersecurity, business intelligence, and data analytics in 2025 compared to 2024." Gartner analysts are discussing the trends that are impacting the IT market during Gartner IT Symposium/Xpo, taking place here through Wednesday. GenAI-Enabled Solutions to Propel Software Spending in India Fueled by expansion in both application and infrastructure software markets, software spending in India is projected to record the highest annual growth rate, increasing 17% in 2025 (see Table 1). Table 1. India IT Spending Forecast, 2023-2025 (Millions of U.S. Dollars) 2023 Spending2023 Growth (%)2024 Spending2024 Growth (%) 2025 Spending2025 Growth (%)Data Center Systems 3,818 6.0 4,310 12.9 4,798 11.3 Devices49,4611.555,90713.063,10512.9Software15,47811.417,90415.720,94517.0IT Services27,6304.830,0658.833,50311.4Communications Services34,019 0.6 35,713 5.0 37,608 5.3 Overall IT130,4063.2143,89910.3159,96011.2 Source: Gartner (November 2024) "The price premium of GenAI-enabled offerings across customer relationship management (CRM), email and authoring, and analytic platforms will drive software spending, resulting in growth of this segment," said Mishra. Gartner predicts that by 2025, more than 50% of application software offerings with GenAI capabilities will carry an associated price premium. Pricing options will continue to evolve through 2025 as buyers are tested for their willingness to pay a GenAI premium. "Despite the global services market being characterized by cautious spending, macroeconomic uncertainty, and higher capital costs, IT services spending in India is projected to grow 11.4% in 2025," said Mishra. "Service engagements around cloud, application, and consulting are expected to drive stronger growth in India. Furthermore, GenAI's role in delivering industry use cases and improving labour productivity will be a key expectation from Indian enterprises in 2025 and beyond." Demand for AI-Ready Infrastructure to Boost Data Center Systems Growth "Spending on data center systems in India is projected to total $4.7 billion in 2025, fueled by the rising enterprise need for new infrastructure to support AI integration," said Mishra. "Data center providers, including hyperscalers, are expanding their footprint in India to meet enterprise demands for increased data storage and computing capacity, while adhering to regulatory requirements, further driving the growth of this segment." Gartner's IT spending forecast methodology relies heavily on rigorous analysis of the sales by over a thousand vendors across the entire range of IT products and services. Gartner uses primary research techniques, complemented by secondary research sources, to build a comprehensive database of market size data on which to base its forecast. The Gartner quarterly IT spending forecast delivers a unique perspective on IT spending across the hardware, software, IT services and telecommunications segments. These reports help Gartner clients understand market opportunities and challenges. The most recent IT spending forecast research is available to Gartner clients in "Gartner Market Databook, 3Q24 Update." Learn more in the complimentary Gartner webinar IT Spending Forecast, 3Q24 Update: 2025, The Trough is Coming. About Gartner IT Symposium/Xpo Gartner IT Symposium/Xpo is the world's most important gathering for CIOs and other IT executives. IT executives rely on these conferences to learn how to amplify the impact of the technology, insights and trends shaping the future of IT and business. Follow news and updates from the conferences on X using #GartnerSYM, and on the Gartner Newsroom. About Gartner for High Tech Gartner for High Tech equips tech leaders and their teams with role-based best practices, industry insights and strategic views into emerging trends and market changes to achieve their mission-critical priorities and build the successful organizations of tomorrow. Additional information is available at www.gartner.com/en/industries/high-tech. Follow news and updates from Gartner for High Tech on X and LinkedIn using #GartnerHT. About Gartner Gartner, Inc. (NYSE: IT) delivers actionable, objective insight to executives and their teams. Our expert guidance and tools enable faster, smarter decisions and stronger performance on an organization's mission-critical priorities. To learn more, visit gartner.com.

IT spending to rise by 11.2% in 2025; higher impact on jobs

The IT spending shrunk by 0.5% to $112.56 billion in 2023 while it grew 10.7% to $124.61 billion in 2024. The software spending is estimated to record the highest annual growth rate of 17% in 2025 while data centres systems and devices may see a slower growth.India IT spending is projected to increase by 11.2% from year to total almost $160 billion in 2025, according to the latest forecast by research and consulting firm Gartner. This is likely to be driven by spending in software and IT services. In 2024, the overall IT spending so far grew 10.7% to $124.61 billion after shrinking by 0.5% at $112.56 billion in 2023. Data centres systems and devices may see a tad slower growth, while software spending in India is projected to record the highest annual growth rate of 17% in 2025 fuelled by expansion in both application and infrastructure software markets. "In 2025, Indian chief information officers (CIOs) will start allocating budgets for generative AI (GenAI) beyond initial proof-of-concept projects. While spending on GenAI will increase, CIOs' expectations for its capabilities will diminish," said Naveen Mishra, vice president analyst at Gartner. Leaders plan to allocate around 6.5% of their functional budget to GenAI, he added. And even as GenAI expectations are peaking and focus continues to remain on productivity, Gartner predicts that it will be the main focus in a quarter or 25% of all AI services engagements by 2028, up from 8% in 2024. Additionally, Mishra expects a significant boost in spending on technologies such as cybersecurity, business intelligence, and data analytics in 2025 compared to 2024. Jobs impact Incidentally, the buzz on job losses continues. Gartner report also says that corporate leaders expect GenAI will replace 3.8% of headcount in 2024, 6.1% by 2025, and double from today at 8.2% by 2026. This is on the back of an average 18% jump in productivity expected by executives over the next 12-18 months from GenAI. Gartner predicts that by 2025, more than 50% of application software offerings with GenAI capabilities will carry an associated price premium even as the pricing options will continue to evolve. According to Mishra, there will be stories of success and failures from GenAI and as those successful ones move forward, the hype around GenAI will diminish. "Those personas who want to be characterised as GenAI-accelerated adopters, they would be the ones who will use GenAI for game changing things and disrupting their business models... But yes, (for now) we have more proof points for steady-state adopters as compared to the accelerated ones," Mishra added. India IT Spending Forecast, 2023-2025 (Millions of US Dollars) Source: Gartner (November 2024)