While spending on GenAI is expected to increase, CIOs’ expectations for its capabilities may diminish.
India’s IT spending is projected to reach $160 billion in 2025, marking an 11.2% increase from 2024, according to a recent study by research firm Gartner.
“In 2025, Indian Chief Information Officers (CIOs) will begin allocating budgets for generative AI (GenAI) beyond initial proof-of-concept projects. While spending on GenAI is expected to rise, CIOs’ expectations for its capabilities may decline. Additionally, Indian CIOs are expected to significantly increase spending on technologies such as cybersecurity, business intelligence, and data analytics in 2025 compared to 2024,” said Naveen Mishra, VP Analyst at Gartner.
This shift in expectations could reflect a growing recognition of the technology’s limitations or an adjustment as it continues to evolve.
Enterprises Set to Increase GenAI Software Spending in India
The US-based research major predicted that the software spending in India is expected to grow at the fastest yearly pace, reaching 17% in 2025.
Mishra further stated, “The price premium of GenAI-enabled offerings across customer relationship management (CRM), email and authoring, and analytic platforms will drive software spending, resulting in growth of this segment.”
More than half of application software products with GenAI capabilities, according to Gartner, will have a related pricing premium by 2025. As consumers are tested for their readiness to pay a GenAI premium, pricing possibilities will keep changing through 2025.
“We project IT services spending in India to grow 11.4% in 2025, despite the global services market being characterized by cautious spending, macroeconomic uncertainty, and higher capital costs.” Service engagements around cloud, application, and consulting are expected to drive stronger growth in India. Furthermore, GenAI’s role in delivering industry use cases and improving labor productivity will be a key expectation from Indian enterprises in 2025 and beyond,” said Mishra.
Demand for AI-Ready Infrastructure to Accelerate Data Center Systems Expansion
“Spending on data center systems in India is projected to total $4.7 billion in 2025, fueled by the rising enterprise need for new infrastructure to support AI integration,” said Mishra. “Data center providers, including hyperscalers, are expanding their footprint in India to meet enterprise demands for increased data storage and computing capacity while adhering to regulatory requirements, further driving the growth of this segment.”
Gartner’s IT spending projections are based on a detailed analysis of sales from over 1,000 vendors across all IT products and services. The company combines primary research with secondary data to build a comprehensive market size database for its forecasts.