According to IDC India, the growth slowdown is expected due to reduced consumer IT expenditure— including mobile phone and laptop sales—which is tipped to decline sharply this year.

Enterprises to keep domestic IT spending resilient

Demand for digital transformation, data localization rules and related aspects is expected to keep information technology (IT) spending in India resilient in 2022, says a new report.

Total consumer and business IT spending will grow 13% this year, compared to 25% growth in 2021, according to a report by market researcher International Data Corp. (IDC) India.

According to IDC India, the slowdown in growth is expected due to reduced consumer spending on IT – including sales of mobile phones and laptops – which are expected to decline significantly this year.

However, the pace of growth in enterprise spending, as well as costs incurred by IT service providers such as Tata Consultancy Services, Infosys and Wipro, will remain resilient on the back of demand for inter-company cloud migration and the overall digital transformation of domestic enterprises.

As a result, India will continue to outpace global IT spending growth, which is estimated to be around 6% this year. According to industry analysts, the pace of growth in global IT spending is hampered by market headwinds such as inflation concerns, along with a cautious approach by businesses offering large deals (over $100 million annually) to IT services firms.

Kumar Rakesh, IT and automotive analyst at BNP Paribas India, said one key factor is the growing importance among businesses to “target” IT spending.

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“This has increased the potential for IT services to attract more clients as customers and supply chains increasingly connect online. Companies are becoming tech-savvy across industries, leading to a structural change in the growth rate of the IT industry. This makes IT big companies resilient to various market factors,” said Rakesh. He further added that while the global IT sector recorded a quarterly growth rate of around 6% in the first half of FY23, the same may achieve “high-digit growth” in the next two quarters.

However, this may lead to emerging global markets such as India playing an increasingly important role as major global spenders hold back.

For example, on July 19, a Bloomberg report said that Apple, the world’s most valuable company at $2.6 trillion in May, will slow hiring and cut spending amid growing macroeconomic concerns.

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