IT spending in Indian businesses is anticipated to reach $108.5 billion in 2023, despite global economic turbulence as per a report by Gartner.  

The prevailing macroeconomic headwinds are causing apprehension among numerous enterprises. Their immediate concerns impacting IT budgets are an escalation of prices due to inflation, shortages in staffing, limitations in the IT supply chain (particularly in the networking domain), and the repercussions of a weakening global economy on anticipated business revenues. 

Despite projected near-flat gross domestic product (GDP) growth in several countries, IT spending is anticipated to retain its resilience. In the case of India, Gartner's forecast for 2023 indicates a modest 0.7% increase in IT spending, reflecting a notable revision compared to their previous projection in November 2022, which had predicted a growth of over 2.6% in technology spending among Indian businesses for the same time period. However, what does the current landscape of leading sectors and evolving IT spending in India look like? 

Manufacturing leads the IT Spending in India 

The manufacturing sector takes the lead in IT spending, followed by the BFSI (Banking, Financial Services, and Insurance) and the IT (Information Technology) sector, data by SalesEdge.  

Notably, the manufacturing sector experienced a significant increase in IT spending, rising from 22% in 2022 to 25% in 2023. Fueled by expansion and driven by megatrends, the manufacturing sector in India has ventured into new geographic areas and market segments. India’s manufacturing exports for FY22 touched a record-breaking total of US$ 418 billion, an overall growth of more than 40% when compared to the previous year's exports, which amounted to US$ 290 billion (IBEF). 

India has taken a significant step forward in promoting Large Scale Electronics Manufacturing through the implementation of the Production Linked Incentive (PLI) scheme. In addition, initiatives such as Make in India, Digital India, and Startup India have played a crucial role in providing the necessary momentum to the Electronics System Design and Manufacturing (ESDM) sector in the country. 

BFSI Sector Witnesses Surge in IT Spending  

Similarly, the BFSI sector witnessed a noteworthy surge, with IT spending increasing from 20% to 25% in 2023. The BFSI sector is witnessing a notable rise in the adoption of emerging technologies such as Buy-now-pay-later (BNPL), neobanks, crypto, blockchain, open integration, and cloud. These technological advancements have resulted in significant enhancements in efficiency, productivity, quality, inclusivity, and competitiveness within the financial services domain, particularly in the realm of digital lending.  

Furthermore, the finance market is expected to exhibit a strong annual growth rate (CAGR 2022-2027) of 14.97%, leading to a projected market volume of US$18.75m by 2027, as per Statista. 

Promising Future for IT Sector  

The IT sector, although experiencing a minor decline with spending decreasing from 18% to 17%, continues to hold significant importance in India's economy. In fact, in FY22, according to IBEF the IT industry accounted for an impressive 7.4% of India's GDP, and it is projected to contribute as much as 10% to India's GDP by 2025. Furthermore, India's IT and business services market is set to reach a remarkable value of US$ 19.93 billion by 2025, demonstrating the sector's immense growth potential. 

Additionally, India's innovation prowess has garnered recognition on the global stage, as evident by its improved ranking of six places to the 40th position in the 2022 edition of the Global Innovation Index (GII).