Indian IT spending (which includes spending by enterprises, service providers and consumers) is projected to grow by 4.7 per cent in 2023 to $86.7 billion, lower than the earlier 5.8 per cent growth forecast for 2023, an IDC report said on Tuesday.
The IT spending by Indian enterprises and service providers is projected to grow 7.8 per cent in 2023, slower than in 2022.
Consumer IT spending (dominated by consumer purchases of devices such as mobiles, tablets, PCs, wearables, and peripherals) saw a drastic decline and turned cautious due to rising prices, pulling the growth to 2.1 per cent in 2023.
"Rising inflation and currency devaluations made technology investments costlier. But with worries around the weakening global macroeconomic situation, spending growth has moderated," said Vinay Gupta, Research Director, IT Spending Guides, IDC Asia/Pacific.
Enterprises' immediate concerns impacting IT budgets are inflation-driven price increases, staffing shortages, IT supply chain constraints -- especially on the networking side, and the impact of the weakening global economy on expected business revenues.
The Reserve Bank of India forecasted moderated GDP growth in 2023 due to the expected global economic slowdown and persistently elevated oil prices, with recovery expected in 2024.
However, India's GDP remains higher than some peer economies, owing to the importance of a large domestic consumer base and less reliance on global demand, said the report.
"Enterprises still face challenges impacting their business and will look at consumption-based models to drive their focus on transformation," Gupta added.
Domestic IT services spending is projected to grow 8.7 per cent in 2023 and software spending is likely to grow 15 per cent, driven by higher adoption of cloud-based solutions.
Due to high inflation, dwindling retail consumer demand impacted sales of mobiles, PC, notebooks, hardcopy peripherals, and tablets affecting consumer IT spending.
Mobile phones constitute the lion's share by value of consumer technology spending in India. Mobile phone shipments declined in 4Q2022, and 2022 had the lowest shipments since 2019.
"Expectations are that concerns around rising prices and higher inventory in the channel will persist until the first half of 2023, with an elongated recovery after that," the report mentioned.