India IT Spending Estimated To Grow In 2021
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Research and consulting organization Coeus Age, in its annual research report Enterprise Business and IT Priorities 2021 revealed that India’s total domestic IT spending by putting enterprise and consumers together is estimated to grow at 8.8 per cent in 2021 and reach a size of INR 273,776 crore.
The spending witnessed a negative growth of -1.8 per cent in 2020 due to the COVID-19 impact, de-growing for the first time ever.
The IT spending growth in 2021 is despite the uncertainty that prevails in the environment. COVID's impact on business is far from over.
It has been stated in the report that 48 per cent of the chief executive officers (CEOs) expect uncertainty to be present through 2021 and another 21 per cent think it may have subsided but may take time to go away. This has implications for the growth scenario that they envisage, 51 per cent see the growth looking uncertain or may take another 6 months to return. This thinking is only natural, given that a vaccination program will also take 6-9 months to cover the entire population. And then there are scares of a new variety of viruses emerging. All put together, the environment will remain uncertain for a larger part of 2021.
The survey further maintains that a deep realization, otherwise, that has been set in the CEO’s mind is that of digital transformation and their new strategic orientation is built largely with digital at the core. This is clearly evident from their stated strategic priorities where 54 per cent of IT model and 46 per cent of digital transformation are at the top. This has direct implications on their IT and digital spend and the specific mix of that spend. Even with the business scenario remaining uncertain, businesses will continue spending on IT and digital.
“Every industry has been negatively impacted by the COVID crisis; IT industry has been no exception. But the impact has been less severe given its importance in helping businesses and individuals survive the crisis. Though the overall spending has marginally dipped in 2020, and the business outlook for 2021 looks uncertain, IT spend is expected to bounce back with 8.8 per cent growth,” commented Dr. Kapil Dev Singh, CEO, Coeus Age.
IT spend by the enterprises
The IT spend by the enterprises of both, business and government, has dipped by 3.5 per cent in 2020, primarily due to lower spending on traditional IT, the report claims.
The commoditized traditional hardware and software products (PC, server, storage, networking, and in-premise enterprise software) spend has been severely hit in 2020 due to COVID. It de-grew by 10.7 per cent and is expected to remain under pressure in 2021 too.
Enterprise spend on digital technologies has saved the day as it grew by 18 per cent in 2020, though at a slower pace than previous years. It is expected to be strong in 2021, growing at 23.4 per cent.
Digital shall help enterprises become agile, sustainable, and efficient
56 per cent of adaptive digital, 49 per cent of ensuring security and business continuity and disaster recovery (BCDR), and 46 per cent of IT operations automation emerge as top three enterprise priorities for 2021, the report revealed.
The top three enterprise priorities for 2021 of adopting digital, ensuring security and BCDR, and IT operations automation are reflections of the environment that businesses are operating in. The triple imperatives of agility, sustainability, and efficiency with inherent tensions among them have been brought to the fore by the COVID crisis. The gradual enterprise approach has been replaced by an urgent focus on leveraging IT and digital to manage the tension while focussing on the three imperatives, the survey further elaborated.
“The COVID crisis has in-fact catalyzed the digital transformation drive of the enterprises. Business leadership is now convinced on the need of revamping their approach to survive in the new normal that has emerged and digital has been accepted as an important cornerstone of their strategy,” Singh added.
The research report is based upon inputs of 96 CEOs and 110 CIOs/IT heads of large and medium-sized Indian enterprises. Inputs were sought regarding their business and IT priorities for 2021.