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Funding for New Digital Business Initiatives to Come From Outside of IT

Mumbai, NFAPost:  IT spending in India is projected to total $93 billion in 2021, an increase of 7.3% from 2020, according to the latest forecast by Gartner, Inc.

The growth in India will be lower than the global average, as worldwide IT spending is projected to total $4.1 trillion in 2021, an increase of 8.4% from 2020.

The source of funds for new digital business initiatives will more frequently come from business departments outside IT and charged as a cost of revenue or cost of goods sold (COGS).

Commenting on the research findings. Gartner Distinguished Research Vice President John-David Lovelock said IT no longer just supports corporate operations as it traditionally has, but is fully participating in business value delivery.

“Not only does this shift IT from a back-office role to the front of business, but it also changes the source of funding from an overhead expense that is maintained, monitored and sometimes cut, to the thing that drives revenue,” said John-David Lovelock.

All IT spending segments are forecast to have positive growth through 2022 (see Table 1). The highest growth will come from devices (14%) and enterprise software (10.8%) as organizations shift their focus to providing a more comfortable, innovative and productive environment for their workforce.

Table 1. Worldwide IT Spending Forecast (Millions of U.S. Dollars)

2020 Spending

2020 Growth (%)

2021 Spending

2021 Growth (%)

2022 Spending

2022 Growth (%)

Data Center Systems

219,940

2.3

236,806

7.7

247,513

4.5

Enterprise Software

466,647

-2.1

516,872

10.8

571,725

10.6

Devices

663,223

-6.9

755,798

14.0

778,949

3.1

IT Services

1,021,187

-1.8

1,112,626

9.0

1,193,461

7.3

Communications Services

1,386,471

-0.7

1,450,444

4.6

1,504,743

3.7

Overall IT

3,757,468

-2.2

4,072,547

8.4

4,296,391

5.5

Cloud is expected to drive majority of the expected software growth in India during 2021. (See Table 2).

Gartner Senior Research Director Naveen Mishra said the Indian economy is observing a slow but steady growth trajectory this year.

“Additionally, the government relaxation of foreign investment in certain sectors such as insurance, infrastructure, telecommunications will provide additional funds for business and IT leaders to accelerate their digital transformation journey,” said Naveen Mishra.

Table 2. India IT Spending Forecast (Millions of U.S. Dollars)

2020 Spending

2020 Growth (%)

2021 Spending

2021 Growth (%)

2022 Spending

2022 Growth (%)

Data Center Systems

3,412

-8.1

3,559

4.3

3,607

1.3

Enterprise Software

6,807

2.3

7,713

13.3

8,534

10.6

Devices

32,213

-15.2

34,692

7.7

37,080

6.8

IT Services

15,419

0.05

16,793

8.9

18,090

7.7

Communications Services

28,736

-1.4

30,167

4.9

31,239

3.5

Overall IT

86,587

-7.1

92,923

7.3

98,551

6.0

Source: Gartner (April 2021)

Although optimisation and cost savings efforts won’t disappear simply because there’s more economic certainty in 2021, the focus for CIOs through the remainder of the year will be completing the digital business plans that are aimed at enhancing, extending and transforming the company’s value proposition.

“Last year, IT spending took the form of a ‘knee jerk’ reaction to enable a remote workforce in a matter of weeks. As hybrid work takes hold, CIOs will focus on spending that enables innovation, not just task completion,” said John-David Lovelock.

More detailed analysis on the outlook for global IT spending is available in the Gartner webinar “IT Spending Forecast, 1Q21 Update: How the Winners are Winning.” Learn more about emerging trends, expected challenges and next steps for CIOs and IT leaders in the free Gartner E-Book “Top Priorities for IT: Leadership Vision for 2021.”

Gartner’s IT spending forecast methodology relies heavily on rigorous analysis of sales by thousands of vendors across the entire range of IT products and services.

Gartner uses primary research techniques, complemented by secondary research sources, to build a comprehensive database of market size data on which to base its forecast.

The Gartner quarterly IT spending forecast delivers a unique perspective on IT spending across the hardware, software, IT services and telecommunications segments.

These reports help Gartner clients understand market opportunities and challenges. The most recent IT spending forecast research is available to Gartner clients in “Gartner Market Databook, 1Q21 Update.” This quarterly IT spending forecast page includes links to the latest IT spending reports, webinars, blog posts and press releases.

About the Gartner Information Technology Practice
The Gartner IT practice provides CIOs and IT leaders with the insights and tools to drive the organization through digital transformation to lead business growth. Additional information is available at https://www.gartner.com/en/information-technology.

Gartner, Inc.  is the world’s leading research and advisory company and a member of the S&P 500. We equip business leaders with indispensable insights, advice and tools to achieve their mission-critical priorities and build the successful organizations of tomorrow.

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