IT spending in India is forecast to increase by 5.5 percent this year, even as IT budgets are expected to be flat in North America and Europe, according to research firm Gartner.
However, that's lower than the 13 percent growth in India last year and 16 percent growth in 2007, said Partha Iyengar, Gartner's head of research in India, in a conference call on Thursday with reporters.
CIOs in India have reacted to the recession by cutting IT costs. But that may not be the best strategy as new investment in IT in a relatively new market like India will be critical for companies to grow their businesses and improve workforce effectiveness, Iyengar said.
Gartner forecast in January that global IT spending this year will be flat. A pick up in spending of about 3.5 percent is expected next year, mainly because CIOs may not be able to defer much longer some IT expenses, said Peter Sondergaard, global head of research at Gartner.
Worldwide, market segments like government, health care, and utilities will see 2 to 3 percent growth in IT spending this year, Sondergaard said.
In contrast, industries such as discrete and process manufacturing, transportation and financial services -- including banking and insurance -- will spend marginally less on IT this year, he added.
In India, the key business priority of CIOs is on reducing enterprise costs through IT, followed by improving enterprise workforce effectiveness and business processes, Gartner said. In contrast, the key business concern of CIOs globally is business process improvement.
The top three technology priorities of Indian CIOs are business intelligence, enterprise applications like enterprise resource planning (ERP) and server and storage technologies including virtualization, Iyengar said.
A number of technology companies continue to invest in India. Cisco Chairman and CEO John Chambers said earlier this month that his company was committed to investing in India because it is a very fast-growing market for the company, with very high GDP (gross domestic product) growth.