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

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 impactIncidentally, 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)2023 Spending2023Growth (%)2024 Spending 2024 Growth (%)2025 Spending2025Growth (%)Data Centre Systems 3,818 6.

0 4,310 12.

9 4,798 11.

3Devices 49,4611.

5 55,90713.

0 63,10512.

9Software 15,47811.

4 17,90415.

7 20,94517.

0IT Services 27,6304.

8 30,0658.

8 33,50311.

4Communications Services 34,019 0.

6 35,713 5.

0 37,608 5.

3Overall IT 130,4063.

2 143,89910.

3 159,96011.

2Source: Gartner (November 2024).