India government IT spending is projected to total $8.3 billion in 2022, an increase of 8.6% from 2021 according to a latest forecast by Gartner, Inc.
Individual digital solutions do not correlate to overall digital maturity. As a result, the overall digital maturity of Indian government organizations is low compared to its western counterparts. Moving from legacy systems to digital will be a major reason for IT spending growth in 2022. For initiatives, such as digital licensing, online judicial proceedings, digital taxation, that were initiated as a knee-jerk reaction to the pandemic in 2020, there is a still long way ahead to achieve full potential as digital inclusion is not fully met in the country. The forthcoming 5G spectrum auction in India will aim at solving some of these challenges related to digital inclusion in 2022.
Table 1. Government IT Spending Forecast by Segment, 2021-2022, India (Millions of U.S. Dollars)
Segment
|
2021
Spending |
2021
Growth (%) |
2022
Spending |
2022
Growth (%) |
Data Center | 496 | 7.6 | 507 | 2.2 |
Devices | 1,390 | 20.1 | 1,394 | 0.28 |
Internal Services | 1,677 | 6.3 | 1,751 | 4.4 |
IT Services | 1,783 | 16.4 | 2,005 | 12.5 |
Software | 1,462 | 19.4 | 1,823 | 24.7 |
Telecom Services | 828 | 4.0 | 819 | -1.0 |
Total | 7,636 | 13.2 | 8,299 | 8.6 |
Source: Gartner (August 2021)
Indian government organizations, both local and national, will increase spending on all segments of IT in 2022, except for telecom services. The software segment is forecast to achieve the highest growth of 24.7% in 2022 as the adoption of citizen service delivery applications with use of artificial intelligence and machine learning will improve across citizen initiatives (see Table 1). As India prepares itself for 5G rollout, the telecom market requires deep pockets to make an impact on innovation, quality of services to citizens, pricing. Hence, the focus on investing on telecom services will be lower as compared to the other segments in 2022.