Worldwide IT spending is projected to reach $5.61 trillion in 2025, reflecting a 9.8% increase from 2024, according to Gartner’s latest forecast. In India, IT spending is expected to grow by 11.1%, reaching $161.51 billion in the same period.
However, despite the rise in budgets for CIOs, much of the increase is likely to be absorbed by escalating costs, impacting actual IT spending.
“While budgets for CIOs are increasing, a significant portion will merely offset price increases within their recurrent spending,” said John-David Lovelock, distinguished VP analyst at Gartner. “This means that, in 2025, nominal spending versus real IT spending will be skewed, with price hikes absorbing some or all of budget growth. All major categories are reflecting higher-than-expected prices, prompting CIOs to defer and scale back their true budget expectations.”
Segments such as data center systems, devices, and software are expected to experience double-digit growth in 2025, driven largely by generative AI (GenAI) hardware upgrades. However, these upgrades are not anticipated to bring significant advancements in functionality.
“GenAI is sliding toward the trough of disillusionment, which reflects CIOs’ declining expectations for GenAI but not their spending on this technology,” Lovelock noted. “For instance, the new AI-ready PCs do not yet have ‘must-have’ applications that fully utilize the hardware. While both consumers and enterprises will purchase AI-enabled PCs, tablets, and mobile phones, these purchases will not be heavily influenced by GenAI functionality.”
Spending on AI-optimised servers is projected to double that of traditional servers in 2025, reaching $202 billion. “IT services companies and hyperscalers account for over 70% of spending in 2025,” Lovelock added. “By 2028, hyperscalers will operate $1 trillion worth of AI-optimized servers, but not within their traditional business models or IaaS markets. Hyperscalers are pivoting to become part of the oligopoly AI model market.”
In India, the data center systems segment is set to nearly double its growth rate from 2024, with a 19.1% increase. “Enterprises are investing in AI-ready infrastructure for targeted use cases,” said Naveen Mishra, VP Analyst at Gartner.
Software and IT services will remain key contributors to India’s IT spending growth, with expected increases of 16.9% and 11.2%, respectively. “While software spending is propelled by the price premium of GenAI-enabled solutions, IT services spending is fueled by enterprises’ need for cloudification, digitization, and consulting services,” Mishra added.
Gartner also forecasts that by 2026, more than 50% of software spending in application software will be influenced by GenAI. “As enterprises focus on developing and enhancing technological frameworks for AI, investment in tools and platforms for deployment, management, and scaling will increase,” Mishra explained.
Capgemini’s report, titled “Navigating Uncertainty with Confidence – Investment Priorities for 2025,” underscores an optimistic outlook among business leaders despite market uncertainties.
The study found that 61% of Indian executives are optimistic about their organisations’ prospects in 2025, up from 53% in 2024. Additionally, 55% of Indian business leaders plan to increase investments in 2025, compared to 50% globally.
Technology remains a top priority for Indian businesses, with 75% of surveyed leaders identifying artificial intelligence (AI) and generative AI (GenAI) as their leading investment focus for 2025, slightly higher than the global average of 74%. Cloud technology ranked second, with 46% of Indian leaders prioritizing it, compared to 42% globally.
However, the report also highlights a strategic shift toward operational efficiency, with 55% of Indian executives prioritising cost reduction over revenue growth in 2025.
