IT spending in India to decline 8.1% in 2020 on Covid impact: Gartner

Published: June 4, 2020 2:50 AM

While spending is on pace to dip across all segments in India this year, technologies such as telehealth, smart-chatbots, mobile applications enabling deliveries, and distance learning education software will experience an increase in spending in 2020.

Infosys has been using its proprietory platform employee collaboration and services platform InfyMe and learning and communication platform Lex, which would go into their numerous remote workspaces.Infosys has been using its proprietory platform employee collaboration and services platform InfyMe and learning and communication platform Lex, which would go into their numerous remote workspaces. (Representative image)

By Srinath Srinivasan

IT spending in India will total $83.5 billion, a decline of 8.1%, in 2020, according to the latest forecast by Gartner. This is the first decline in IT spending experienced in India in the last five years and most of this decline will be in devices and data centres.

“The fear of a global economic recession due to the Covid-19 pandemic is forcing CIOs in India to be very cautious on their IT spending this year,” said Naveen Mishra, senior research director at Gartner. “In partnership with their CFOs, CIOs in India are reprioritising their IT budgets on mission critical initiatives,” he added. The Q4 FY20 earnings report of top Indian IT brands showed expectations of a major slowdown and have hence deferred from announcing revenue and margin guidance for the Q1 FY21. This slowdown has already caused Wipro’s and Infosys’ clients to go for discretionary cuts in spends and also delay payments, especially in retail, which the companies are taking case by case to resolve.

Mishra recommends that in order to adhere to the continued government restrictions on social distancing, CIOs in India will need to spend more on business continuity, remote working and workforce collaboration. This is shifting spending toward technologies such as desktop as a service (DaaS), infrastructure as a service (IaaS), virtual private network (VPN) and security. Infosys has been using its proprietory platform employee collaboration and services platform InfyMe and learning and communication platform Lex, which would go into their numerous remote workspaces.

The overall cloud adoption in India has increased, as a result of this increase in spending. TCS, which announced an ambitious plan to have a permanent remote workforce, has been working on similar platforms for a few years now. Recently the company reported that its Secure Borderless Workspsaces had seen 35,000 meetings, 4,06,000 calls, and 340 lakh messages across TCS on the digital collaboration platform. Almost 75% of TCS’ workforce is expected to work from home by 2025.

Spending on devices and data centre systems in India are on pace to record the steepest declines in 2020, at -15.1% and -13.2%, respectively, as shown in the table.

CIOs in India will consider extending life cycles of their existing device assets which will delay new purchases, according to Mishra. While spending is on pace to dip across all segments in India this year, technologies such as telehealth, smart-chatbots, mobile applications enabling deliveries, and distance learning education software will experience an increase in spending in 2020. As a result, spending on enterprise software is set to record a moderate decline in 2020 at -2.6%.

“The lockdown measures forced sectors such as education, healthcare, and public utilities to accelerate their digital transformation,” said Mishra. “However, sectors such as retail, insurance, and banking that were already advanced in their digital transformation have to reduce their IT spending in 2020. These sectors will continue to spend on targeted digital initiatives such as artificial intelligence, machine learning and virtual sales assistants, however, they will have to reduce or stop spending on business transformation, process re-engineering and modernization of existing systems.”

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