India IT spending to grow at 5.5% in 2022: Gartner

IT services segment, which includes consulting and managed services, is expected to have the second-highest spending growth in 2022, touching $1.3 trillion, up 7.9% from 2021. Business and technology consulting spending, specifically, is expected to grow 10% in 2022.

“2022 is the year that the future returns for the CIO,” said John-David Lovelock, research vice president at Gartner. “They are now in a position to move beyond the critical, short-term projects over the past two years and focus on the long term. Simultaneously, staff skills gaps, wage inflation and the war for talent will push CIOs to rely more on consultancies and managed service firms to pursue their digital strategies.”

Through 2025, organisations will increase their reliance on external consultants, as the greater urgency and accelerated pace of change widen the gap between organisations’ digital business ambitions and their internal resources and capabilities, according to Gartner.

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“2022 is a growth year as Indian CIOs accelerate their long-term digital initiatives, despite the ongoing Omicron scare in India,” said Naveen Mishra, senior research director at Gartner. “Gartner’s 2022 Indian CIO & IT leader survey indicates increasing investment in artificial intelligence/ machine learning capabilities, business intelligence and analytics, and digital business solutions.”

With these investments, like their global peers, Indian CIO’s will also be challenged with skill shortages, leading to increasing dependence on external services partners. This will bolster the spending on the IT service segment, forecast to increase by 9% as compared to 2021. Cloud-based software consumption will be one of the biggest contributors towards the 15% growth in the software segment in India whereas the pent-up demand for data centre technologies will bring 4% growth to the data centre segment in 2022.

“This will be particularly poignant with cloud as it serves as a key element in achieving digital ambitions and supporting hybrid work,” said Lovelock. “Gartner expects the vast majority of large organisations to use external consultants to develop their cloud strategy over the next few years.”

In 2020, within the enterprise application software market, the cloud market became larger than the non-cloud market for the first time, due in part to the coronavirus pandemic. By 2025, it is expected to be double the size of the non-cloud market. Cloud is responsible for nearly all the 11% spending growth within the enterprise software segment in 2022 as organisations focus on upgrading their software stack to software-as-a-service (SaaS) to support continued flexibility and agility.