Gartner's latest report projects that India's IT spending will reach $160 billion in 2025, marking an 11.2 percent increase from 2024. This growth will be driven primarily by expansion in both the application and infrastructure software markets, with software spending expected to see the highest annual growth rate of 17 percent in 2025.

Naveen Mishra, Vice President and Analyst at Gartner, explained that in 2025, Indian Chief Information Officers (CIOs) will begin to allocate more budget for generative AI (GenAI) beyond initial proof-of-concept projects. However, while GenAI spending will increase, CIOs’ expectations for its capabilities are likely to be tempered. 

Mishra also noted that Indian CIOs are expected to make significant investments in other technologies, particularly cybersecurity, business intelligence, and data analytics in 2025, compared to the previous year. The growth in software spending will be fueled by the price premium associated with GenAI-enabled offerings across areas such as Customer Relationship Management (CRM), email and authoring tools, and analytics platforms.

According to Gartner's forecast, more than 50 percent of application software with GenAI capabilities will come with a price premium by 2025. Additionally, pricing models are expected to evolve in 2025 based on buyers' willingness to pay for the GenAI-enhanced features.

The report also highlights that service engagements in the cloud, application, and consulting sectors will drive strong growth in India. Spending on data center systems is expected to reach $4.7 billion by 2025, spurred by increasing demand from enterprises for infrastructure that can support AI integration. This is further supported by the growing presence of data center providers, including hyperscalers, who are expanding in India to meet the need for enhanced data storage and computing capacity, while also complying with local regulations.

Gartner's IT spending forecast is based on an extensive analysis of sales data from over a thousand vendors across various IT products and services, combining both primary and secondary research sources to develop a comprehensive market database that underpins its predictions.