Highest growth to be recorded in software in 2022
India government IT spending is projected to total USD 8.3 billion in 2022, an increase of 8.6% from 2021 according to Gartner.
“Digitalization initiatives of Indian government organizations took a giant leap in 2020 because of the global pandemic. The pandemic forced the government to shift priorities as supply chains and revenue streams dwindled,” said Apeksha Kaushik, senior principal research analyst at Gartner. “As vaccination rates increase throughout the country and public health improves, the governments will focus on furthering the digitalization efforts on concerns such as ‘citizen experience’ and digital inclusion.”
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.
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). 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.
Table: Government IT Spending Forecast by Segment, 2021-2022, India (Millions of U.S. Dollars)
Source: Gartner (August 2021)
“In India, with increasing investments on cloud and cyber-security, the prime focus of IT spending by government organizations is on building collaborative partnerships, along with technology solutions. Government CIOs are looking beyond implementation for signs of the impact from the technology, outcome-based futuristic direction they should take and for IT technology/service providers that go beyond provision to partner and collaborate with them to achieve their mission-critical priorities,” said Kaushik.
As cloud deployments and implementations further the digital agenda, privacy, and security continue to be government CIOs’ top concerns in the country. Key technologies that government CIOs in India will be prioritizing their spending on in 2022 will be digital workplace and business continuity solutions, business intelligence and data analytics, responsible AI and blockchain along with improved data privacy & data sharing tools.