A recent study by Nasscom-Avasant reveals India's sustained appeal as the preferred destination for global businesses seeking to enhance their digital services portfolio. Over half of the companies surveyed across sectors such as travel and transportation, telecom, media and entertainment, and construction and engineering expressed a preference for outsourcing digital services to India. Additionally, near shoring to India saw significant traction in 2023, with 41-43% of firms in sectors like telecom, discrete manufacturing, and construction opting for this practice, indicating a growing trend of leveraging nearby countries for outsourcing tasks, the study noted.

Meanwhile, India’s NIFTY IT index that captures the performance of the IT segment of the market has moderated decline and is down around 3% so far in April after a sharp slump of nearly 8% in the previous month. The tech-heavy NASDAQ also tumbled by around 6% so far this month but has seen a minor uptick lately ahead of the Big tech earnings.

IMF Applauds India For Strong Growth Numbers

The International Monetary Fund (IMF) has hiked India's economic growth projection to 6.8% for the current year from its January forecast of 6.5% and noted that, India continues to be the fastest growing economy of the world. Growth in India is projected to remain strong at 6.8 per cent in 2024 and 6.5 per cent in 2025, with the robustness reflecting continuing strength in domestic demand and a rising working-age population, according to latest edition of the World Economic Outlook released by the IMF ahead of the annual spring meetings of the IMF and the World Bank. The fund noted that global economic growth, estimated at 3.2 per cent in 2023, is projected to continue at the same pace in 2024 and 2025.

Meanwhile, the International Monetary Fund stated that Asia and Pacific economic growth surprised on the upside in the second half of 2023 as robust domestic demand fueled activity, especially in emerging Asian economies. Malaysia, the Philippines, Vietnam, and most notably India, recorded sizable positive growth surprises, according to IMF. Growth for the region reached 5 percent in 2023, much stronger than a growth of 3.9 percent in 2022, and this represents a 0.4 percentage points higher than what we had projected in the October 2023 Regional Economic Outlook, and the momentum carries over into 2024. The fund now projects the region to grow by 4.5 percent in 2024 and upward revision of 0.3 percentage points relative to October. With this, Asia would contribute about 60 percent of global growth. The region is projected to grow by 4.3 percent in 2025.

Gartner Forecasts Worldwide IT Spending to Grow 8% in 2024; Spending in India IT sector to hit US$ 139 bn in 2024

Worldwide IT spending is expected to total $5.06 trillion in 2024, an increase of 8% from 2023, according to the latest forecast by Gartner. This is an increase from the previous quarter’s forecast of 6.8% growth and puts worldwide IT spending on track to surpass $8 trillion well before the end of the decade. Meanwhile, spending on data center systems is expected to see a notable jump in growth from 2023 (4%) to 2024 (10%), in large part due to planning for generative AI (GenAI). Enterprises are transitioning from storytelling to planning and execution phases regarding GenAI, with AI servers expected to dominate hyperscalers' spending. Additionally, there's significant investment in markets supporting large-scale GenAI projects, such as servers and semiconductors. Furthermore, the devices segment is anticipated to grow, with GenAI capabilities integrated into premium and basic phones, sustaining the sector's evolution, the report noted.

In 2024, the Indian information technology (IT) sector is poised for significant growth, with spending projected to reach US$ 138.9 billion, marking a substantial increase from the previous year, says Gartner. This growth is anticipated across all major segments, including software, devices, IT services, and data centre systems. Notably, software spending in India is expected to experience the highest growth rate of 18.6%, followed closely by devices at 13.8%. Chief information officers (CIOs) in India are prioritizing growth, customer experience, and operational efficiency, leveraging software assets amidst challenging conditions. However, spending on generative artificial intelligence (GenAI) remains minimal in the short term as Indian CIOs are in the planning and evaluation stage regarding this technology.

India’s services exports continue to expand, Says ADB

India retains its strong position in exports of information technology services, according to the Asian Development Outlook report. India’s services exports, which account for 47% of the region total, continued to expand last year, albeit at a gradually slower pace. Growth was driven by telecom and information technology services on the back of booming global demand for digital services related to the work-from-home shift. India is well positioned with a strengthening software development industry as well as growth in consulting and other business services. India’s exports will be helped by continued strength in services, particularly information technology and digital business services, the report further noted. India continues to benefit from improved competitiveness in digital services featuring higher value added, including through Indian global capability centers set up by multinational corporations. Imports will outgrow exports in FY2024, driven by strong domestic demand especially for capital goods and intermediate goods.

Further, the RBI also noted in its monthly bulletin that India’s success story has also benefitted from the global boom in digital services exports. According to the WTO, global exports of digitally delivered services have more than tripled since 2005, growing at 8.1 per cent per annum on average during 2005-22, thus outpacing the growth in exports of both goods and other services (WTO, 2023). The exports of digitally delivered services in 2022 were 37 per cent above their 2019 level, mainly due to a rise in remote-work set-up. India’s performance over this period was even more striking with growth of 93 per cent.

PC shipments recover as Inflation numbers trend down: IDC

After two years of decline, the worldwide traditional PC market returned to growth during the first quarter of 2024 (1Q24) with 59.8 million shipments, growing 1.5% year over year, according to preliminary results from the International Data Corporation (IDC) Worldwide Quarterly Personal Computing Device Tracker. Growth was largely achieved due to easy year-over-year comparisons as the market declined 28.7% during the first quarter of 2023, which was the lowest point in PC history. In addition, global PC shipments finally returned to pre-pandemic levels as 1Q24 volumes rivaled those seen in 1Q19 when 60.5 million units were shipped.

With inflation numbers trending down, PC shipments have begun to recover in most regions, leading to growth in the Americas as well as Europe, the Middle East, and Africa (EMEA). However, the deflationary pressures in China directly impacted the global PC market. As the largest consumer of desktop PCs, weak demand in China led to yet another quarter of declines for global desktop shipments, which already faced pressure from notebooks as the preferred form factor.

Outlook:

The technology industry is seen making a comeback in 2024 after experiencing highs and lows since pandemic hit 2020. Generative AI (genAI) has rapidly accelerated digital transformation across various industries, bringing new possibilities. India leads globally in GenAI adoption, with 81% of organizations incorporating it into operations, as per a report by Elastic. Insights from 3,200 IT decision-makers, including 300 from India, indicate a promising investment outlook, with 94% expecting increased budget allocations towards GenAI initiatives in the next 2-3 years. However, concerns about data processing and usage were expressed by nearly all respondents, emphasizing the importance of working with GenAI providers to safeguard sensitive information.

Meanwhile, Deloitte's recent report, 'Technology Trends 2024: India Perspective,' predicts India's pivotal role in spatial computing, the industrial metaverse, cloud computing, and generative AI (GenAI). The rapid adoption of new technologies is evident, with AI-related initiatives tripling between 2023 and 2024 and over 650,000 employees undergoing GenAI skills training, the report noted. Projections estimate revenue in spatial computing and the industrial metaverse to reach US$ 25.2 million (Rs. 2.1 billion) by 2024, with a projected compound annual growth rate (CAGR) of about 40% until 2030. India's technological sector is poised for substantial growth, with anticipated industry revenue hitting US$ 254 billion by the fiscal year 2024, growing at a 3.8% year-on-year rate.

Table 1. Worldwide IT Spending Forecast (Millions of U.S. Dollars)