India's IT spending to reach $160 billion in 2025: Report

India's IT spending is projected to reach $160 billion in 2025, an increase of 11.2 per cent from 2024, according to a report on Tuesday.

Fuelled by expansion in both application and infrastructure software markets, software spending in India is projected to record the highest annual growth rate, increasing 17 per cent in 2025, according to a Gartner report.

“In 2025, Indian chief information officers (CIOs) will start allocating budgets for generative AI (GenAI) beyond initial proof-of-concept projects,” said Naveen Mishra, VP Analyst at Gartner.

“While spending on GenAI will increase, CIOs' expectations for its capabilities will diminish. Additionally, Indian CIOs are expected to significantly boost spending on technologies such as cybersecurity, business intelligence, and data analytics in 2025 compared to 2024,” Mishra added.

The price premium of GenAI-enabled offerings across customer relationship management (CRM), email and authoring, and analytic platforms will drive software spending, resulting in growth of this segment.

By 2025, more than 50 per cent of application software offerings with GenAI capabilities will carry an associated price premium. Pricing options will continue to evolve through 2025 as buyers are tested for their willingness to pay a GenAI premium.

Despite the global services market being characterized by cautious spending, macroeconomic uncertainty, and higher capital costs, IT services spending in India is projected to grow 11.4 per cent in 2025.

“Service engagements around cloud, application, and consulting are expected to drive stronger growth in India. Furthermore, GenAI's role in delivering industry use cases and improving labour productivity will be a key expectation from Indian enterprises in 2025 and beyond,” according to the report.

Spending on data centre systems in India is projected to total $4.7 billion in 2025, fuelled by the rising enterprise need for new infrastructure to support AI integration.