Spending on tech devices surpasses spending on communication services in India

20 November 2018 Consultancy.in 3 min. read
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Speaking at the Gartner Symposium/IT Expo for 2018, analysts from global research and advisory firm Gartner have predicted a rapid increase in expenditure in India’s IT sector, alongside a shift in priorities. Spending on devices, for instance, has surpassed spending on communications services and will continue to grow faster through 2019.

This year’s symposium was held in Goa between the 13th and 16th of November, and most reports confirmed the trend that has been apparent across India in recent years – the rapid digitalisation of its economy. Gartner analysts revealed that IT expenditure in India currently stands at nearly $84 billion.

By next year, this expenditure is expected to grow by 6.7% to surpass $89 billion. As per the analysts, this growth is primarily a result of a growing receptiveness to digital transformation measures amongst organisations in India, both in the pubic sector as well as in the private sector.

This receptiveness, in turn is a result of an interplay of various factors, including the rapid expansion of the online consumer base in India, which is expected to surpass 850 million people by as early as 2025. Simultaneously, the global wave of technological advancement is forcing organisations everywhere to digitally transform in order to remain relevant.

Spending on tech devices surpasses spending on communication services in India

In India, digital expansion has become a top priority for the business environment, and has now spread across a number of sectors. Digital lending in India, for instance, is expected to surpass a total value of $1 trillion over the next five years, while 5G technology is expected to take the entire digital economy beyond $1 trillion. 

All these factors have combined to drive up the IT expenditure in the country, although priorities are shifting within this broad domain. In 2017, communications services drew the most expenditure, followed by devices and IT services. This year, the spending on devices has shot past that on communications and will continue to grow over the next year. Expenditure on IT services, meanwhile, grew by 9.5% last year and will grow by 13.5% over the next year, according to Gartner.

As explained by Managing Vice President at Gartner Ganesh Ramamoorthy, “Spending on devices (PCs, tablets and mobile phones) is set to total $33 billion in 2019, a growth of 7.4 percent year over year. Mobile phones are contributing to the growth in the segment, and their growth is led by the continued shift from feature phones to smartphones. The increasing demand for quality mobile phones has led to the rising average selling price of mobile phones in India, positioning India as having the third-fastest device market growth — behind Indonesia and South Africa.”

Research Vice President at the firm John Lovelock added, “An increased focus on providing a better customer experience is increasing spending on enterprise application software. The software as a service market is driving growth in almost all software segments in India, and the customer relationship management SaaS market in India is among the fastest growing in the world. Overall, enterprise software spending is forecast to amount to $6.3 billion and grow 12.9 percent in 2019.”