Amid global concerns, IT spending remains strong among Indian government bodies, private enterprises

Information technology (IT) spending by Indian enterprises is set to grow at 7.8% this calendar year despite concerns about inflation, workforce shortage and supply chain disruptions among customers, according to an IDC report dated April 25. Spending, currently, remained resilient in CY22 — an IDC report on Tuesday said domestic enterprise IT spending grew 8.1% last year to $10.87 billion.

A significant contributor to IT spending in India was government bodies and agencies, which increased technology spending by 11.5% to $10.55 billion in calendar year 2022 – with IT services, data centers and software projects being the fastest growing sub-sectors. Government technology spending is expected to grow 10.3% this year to $11.63 billion.

This is in sharp contrast to the revenue growth estimates presented last month by India’s large- and mid-cap IT service providers, which cut revenue growth estimates driven by the industry-wide slowdown. On April 13, Infosys, India’s second largest IT services firm by market cap, forecast revenue growth of 4-7% in FY24 this fiscal — down from 15.4% revenue growth in FY23. Wipro Chief Executive Thierry Delaporte had said on April 27 that the company expected a 1-3% decline in revenue in the June quarter.

Others, such as HCLTech, also disclosed expected revenue growth of around half of FY12 – On 20 April, HCLTech chief executive C Vijayakumar said the company would report 6–8% revenue growth in FY12 after registering 13.7% revenue growth. % expected revenue growth. In FY23.

Industry experts and analysts said at the time that revenue growth is expected to decelerate for India’s IT service providers due to a reduction in technology spending in the banking and financial services sector, which contributes about 30% of the net revenue earned by India. gives. Largest IT firm. Other industries, such as manufacturing and retail, are also projected to slow, going forward.

Explaining why tech spending in India will continue to grow despite the global slowdown, a Gartner report on the IT sector published on Wednesday by the firm’s principal analyst Apeksha Kaushik said, “India’s governments continue to focus on modernization initiatives Will keep Digital efforts for increased productivity, automation and other software-driven transformation. For example, they are ensuring that public sector institutions in India create mobile-first experiences for their citizens, especially those who do not have smartphones. At the local level, UMANG applications are offering all services through a single portal to enhance government service-delivery experiences.”

Harish Krishnakumar, Senior Market Analyst – IT Services at IDC India, said, “Factors such as the possibility of an impending recession, high inflation, etc. are not expected to have a significant impact on the Indian IT services market in the near term. There will be some slowdown due to spending cuts, delay in decision making etc.”

In October last year, Vinay Gupta, research director, IT spending guide at IDC APAC, said that IT spending “is expected to exhibit resilience in the near term.”

He added, “Indian enterprises continue to focus on their digital innovation initiatives, business operational flexibility and customer experience programmes. However, enterprises are closely monitoring global developments.”